Nickel and other base metals marched higher on Thursday after the US central bank signalled rate cuts and investors hoped that the economy of top metals consumer China would recover. Both nickel and copper touched the highest levels in more than three weeks, partly fuelled by speculators buying back bearish positions, traders said.
Metals got impetus after the US Federal Reserve on Wednesday said the case for lower rates was building, pointing to an easing of monetary policy as early as next month. Industrial metals were showing signs that they might extend the gains, but needed more good news, said Gianclaudio Torlizzi, a partner at consultancy T-Commodity in Milan.
"I'll remain with a cautious stance as long as base metals stay below their 200-day moving averages, which are the watershed levels," he said. Nickel was the only metal on the London Metal Exchange that had breached that level, regarded as key by investors who use chart signals to guide their positions, he said. "We need some more news to really turn bullish. We still have to see that the Chinese economy has really bottomed and is recovering," Torlizzi added.
Three-month nickel, the top gainer on the LME, climbed 1.7% to $12,300 a tonne in closing open outcry trading, the highest since May 28. In the first four months of the year, the global nickel deficit narrowed to 27,200 tonnes from a deficit of 59,400 tonnes in the same period of 2018, data showed.
LME copper gained 0.9% to end at $5,973 a tonne, having touched $6,027, the strongest since May 21, after unions at Chile's Chuquicamata mine called on members to reject a sweetened contract offer from Codelco, the world's largest copper producer. Global primary aluminium output rose to 5.438 million tonnes in May from a revised 5.222 million tonnes in April, data showed.
Metals got a boost after the dollar index sank and was on track for its biggest two-day drop this year following the Fed announcement, making dollar-denominated metals cheaper for holders of other currencies. Tin spreads have eased after a big build-up in LME inventories, which have soared sevenfold over the past six weeks.
The premium of cash tin over the three-month contract has slid to $55 a tonne, the lowest since April and down from a peak of $320 on May 23. LME aluminium finished down 0.1% at $1,781 a tonne after touching $1,807.50, the strongest since May 31, zinc shed 0.4% to $2,468, lead added 0.5% to $1,903 and tin, untraded in closing rings, was bid up rose 1.3% to $19,150.