Chinese nickel futures led most base metals higher on Tuesday, helped by a resurgent market for steel. Nickel, chiefly used in making stainless steel, has been on a tear, rising 27 percent in price since early July on the Shanghai Futures Exchange.
"Nickel has supply issues that are still playing out and that's helping, particularly when we see steel prices going up too," said a commodities trader in Sydney. The most-traded nickel contract on the Shanghai Futures Exchange ended 1.3 percent firmer at 94,070 yuan ($14,254.54) a tonne. ShFE copper gained 0.3 percent.
ShFE zinc contract reversed the previous day's loss and was up 0.02 percent, also aided by optimism in steel markets. Zinc is needed in steel galvanising. Lead, also found in steel, gained 0.37 percent. The most-active rebar futures on the Shanghai Futures Exchange was trading 0.03 percent higher.
Weekly copper stocks in warehouses registered by the Shanghai Futures Exchange declined by 8.2 percent to 187,444 tonnes. Meanwhile, on-warrant inventories - those not earmarked for removal - in LME depots have halved to 112,950 tonnes over the past six weeks, data last week showed.
Indonesia and Freeport-McMoRan Inc on Tuesday reached an agreement to allow the US miner to keep operating its giant Grasberg copper and gold mine, though the timing and price of a 51 percent divestment in the mine still needs to be worked out. US President Donald Trump last month rejected a Chinese proposal to cut steel overcapacity, despite the endorsement of some of his top advisers, the Financial Times said, citing people familiar with the matter.
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