Thursday, 13 August 2015 18:51
LONDON: Copper steadied on Thursday above the previous session’s six-year low after China’s central bank said there was no basis for further yuan depreciation, dampening concerns the country’s appetite for metals imports could wane.
Nickel, zinc and lead and tin were also steadier, though along with copper they came under pressure from a stronger dollar, which makes dollar-priced metals costlier for non-US investors. Three-month copper on the London Metal Exchange traded down 0.7 percent at $ 5,180 a tonne in official midday rings.
The red metal saw wild swings on Wednesday. It plunged to a six-year trough of $ 5,062 a tonne, in reaction to China allowing the yuan to weaken again after a mini-devaluation on Tuesday, but recovered to end up 1.3 percent.
Nickel traded down 0.5 percent in rings at $ 10,545, having plunged 15 percent to a six-year low of $ 9,100 on Wednesday, zinc was last bid down 0.4 percent to $ 1,822, lead was last bid down 0.6 percent to $ 1,730 while tin was last bid down 0.5 percent in rings to $ 15,050.
“The initial reaction to the devaluation was overdone. We’ve just had a bit of relief when the market realised this is not going to be a series of devaluations,” said Grant Sporre, metals analyst at Deutsche Bank.
A weaker yuan makes metals imports for China, the world’s top metals consumer, more expensive.
The yuan, also known as the renminbi, dropped for a third straight day on Thursday, though its fall slowed after China’s central bank said there was no basis for more depreciation.
But weighing on metals prices was a rebound in the dollar, which had also suffered as investors pared back bets the US would start to raise interest rates next month.
US retail sales data due at 1230 GMT will be closely watched for further clues on the Federal Reserve’s rate outlook.
“With the renminbi unlikely to go into freefall and with commodity prices currently very low, we still expect China’s commodities’ demand to pick up in tandem with industrial activity and exports later in the year,” Standard Chartered said in a note.
In industry news, miner and commodity trader Glencore said its first-half copper output from its own sources fell 3 percent to 730,900 tonnes and full-year output would be between 1.5 million and 1.55 million tonnes.
Aluminium traded down 1.2 percent at $ 1,569 a tonne, the sharpest fall in the base metals complex.
The light metal hit a six-year low of $ $ 1,553.50 on Wednesday.
