Rising steel prices in China helped to boost steelmaking ingredients zinc and nickel on Tuesday despite a stronger dollar making metals more expensive for buyers with other currencies. China is the world's biggest steel producer and a seasonal recovery in construction activity has driven prices higher, with steel product rebar up 16 percent since late March.
"The stainless cycle is looking a little bit better," said BMO Capital Markets analyst Colin Hamilton. "I can see them (nickel and zinc) being supported." Benchmark nickel on the London Metal Exchange closed up 0.9 percent at $14,905 a tonne, taking gains since the start of May to around 10 percent. Nickel on the Shanghai Futures Exchange hit three-year highs on Tuesday.
Technical resistance was at Friday's high of $15,055 and profit-taking around the $15,000 mark was making it harder for prices to move higher, broker Marex Spectron said. LME zinc ended up 1.3 percent at $3,089 a tonne. The metal has fallen 14 percent from a 10-1/2 year high in February but was threatening to break above its downtrend line on Tuesday, which could trigger technical buying.
On-warrant zinc inventories available to the market in LME-registered warehouses fell 9.2 percent to 195,325 tonnes, suggesting a tighter market. However, levels are still far from April's low of 139,450 tonnes. Underpinning a strong demand outlook for industrial metals, growth in China's vast manufacturing sector is expected to have dipped only marginally in May.
Eight Chinese regions have promised to beef up anti-pollution curbs, extending a crackdown on polluting industry which cut metals production capacity last year and helped to lift prices. The dollar extended a six-week rally, strengthening to a 2018 high against a basket of major currencies and making metals costlier for non-US investors.
An Indian state ordered the permanent closure of the country's second-biggest copper smelter, which produces more than 400,000 tonnes a year. There was no strong price reaction. LME copper finished down 0.4 percent at $6,859 a tonne. LME tin closed 1.4 percent higher at $20,425 a tonne after last week hitting its lowest since January. Traders said the market was concerned that shipments from China's top supplier Myanmar were falling.
A global aluminium producer has offered Japanese buyers a premium of $159 a tonne for primary metal shipments for the July-September quarter, up 23 percent from the current quarter, sources said. LME aluminium ended up 0.5 percent at $2,274 a tonne while lead closed 0.3 percent higher at $2,446.
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