On the Shanghai Futures Exchange, the most-traded June aluminium contract closed 0.5 percent higher at 14,930 yuan ($2,376) a tonne on Wednesday, just below a nearly three-month high reached on Tuesday. In Shanghai, copper gained 0.6 percent to end at 51,170 yuan. US sanctions on major aluminium producer Rusal have pushed aluminium prices by more than 20 percent since the sanctions began earlier this month. Some traders and analysts were puzzled about the sudden spike in nickel prices, with some attributing it to technical factors.
Global miner Rio Tinto said adjustments may be made to its 2018 aluminium output following sanctions on its Russian partner UC Rusal imposed by the United States earlier this month. "The sanctions against Rusal and resulting dissociation with Rusal by its banks, suppliers, customers and related parties resulted in heightened concern about a global supply shortage," said Helen Lau, analyst at Argonaut Securities.
There was little impact on base metals prices from China's surprise move to cut banks' reserve requirement ratio (RRR), which only lifted Chinese steel, coke and coking coal futures sharply. "The RRR cut was positive, but it may not have very significant impact on financial markets. In terms of size, the steel market is also much bigger than base metals," said CRU analyst Wan Ling.
China's central bank unexpectedly said it will reduce the cash banks hold as reserves by 100 basis points from April 25. But the move falls short of broad monetary easing, with the authority attaching requirements on how funds must be used. Rio last week declared force majeure on some customer contracts in light of the sanctions on Rusal, the world's second biggest aluminium producer, and said it is reviewing Rusal's 20 percent stake in its Queensland Alumina refinery.