Industrial metals prices regained ground on Thursday as planned trade talks between China and the United States and a recovery in Turkey's currency rekindled appetite for riskier assets and weakened the dollar. Concerns that trade disputes and a crisis in Turkey will damage economic growth and metals demand had triggered a run of losses which culminated on Wednesday with the London Metal Exchange's (LME) index of six metals plunging to a 13-month low in its worst one-day fall since July 2015.
But Thursday's fillip was likely to be short-lived, said Commerzbank analyst Daniel Briesemann. Although metals were underpriced, he said, the bearish mood among investors reinforced by trade tensions and emerging market currency weakness was still in control. "The sentiment and macro issues are clearly to the downside," he said.
Benchmark copper on the LME closed up 2.4 percent at $5,939 a tonne after falling 4 percent and touching a 15-month low of $5,773 on Wednesday. LME zinc finished 4 percent higher at $2,392 a tonne after a 6.3 percent fall on Wednesday. Lead surged 5.9 percent to $2,040 after losing 7.1 percent the day before, and nickel gained 3.7 percent to $13,325 after a 4.3 percent tumble on Wednesday.
The four metals are down between 16 and 26 percent from their June highs. World shares and emerging market currencies fought to regain their footing after days of turmoil.
The dollar, whose march to 13-month highs has piled pressure on metals by making them more expensive for buyers with other currencies, moved lower, with China's yuan one of the major gainers against it. China is the world's largest consumer of metals. An apparent cooling of its economy is also undermining the outlook for metals demand.
Attempting to keep its economy humming, China almost quadrupled the value of fixed-asset investment projects approved in July. China's zinc production fell in July to the lowest since 2013, while output of copper, lead and alumina rose.
One support for copper prices appeared gone after the world's largest copper mine, Chile's Escondida, said it had reached a deal with workers threatening strike action. Another strike at the smaller Caserones mine in Chile was also averted.
The Indonesian government temporarily revoked export permits for 4.2 million tonnes of nickel ore and 1.5 million tonnes of bauxite, citing zero progress in smelter development. Aluminium ended up 1.1 percent at $2,048 a tonne after falling 2.2 percent on Wednesday. Tin rose 1.1 percent to $18,610 following a 3.2 percent fall the day before. Both are down around 13 percent from June highs.
Comments
Comments are closed.