Thursday, 12 November 2015 00:55
LONDON: Zinc and lead recovered from multi-year lows on Wednesday and copper steadied, having earlier veered towards a six-year trough after a gauge of top metals consumer China’s factory health showed ongoing weakness in the world’s top metals consumer.
China’s October factory output growth cooled to 5.6 percent, slightly lower than a Reuters poll forecast, though the figure was cushioned by a just-above-forecast 11 percent jump in retail sales.
The data hit metals hard, but they recovered after hitting technical support levels.
“I see some bright spots and some continued softness (in the China data). However, there is a definite bearish tone from Chinese and Asian speculators. Shorting has been concentrated during Asian hours, it’s not entirely clear why, if anything, the supply side looks a lot shakier,” said Vivienne Lloyd, analyst at Macquarie.
Three-month London Metal Exchange zinc hit a six-year low of $ 1,553.50 a tonne, but recovered to end up 1.1 percent at $ 1,623. Lead ended down 0.9 percent at $ 1,620, having hit a five-year low of $ 1,582.
Zinc was hit hard even though Belgium’s Nyrstar, the world’s top zinc producer, said on Monday it may cut up to another 400,000 tonnes of zinc concentrate output if prices remain depressed.
Copper ended up 0.4 percent at $ 4,943, having hit $ 4,885 a tonne earlier, its weakest since a six-year low of $ 4,855 in August.
Zambia’s Konkola Copper Mines, owned by Vedanta Resources said on Wednesday its Nchanga mine is making “unsustainable losses”, responding to reports that the miner was set to close the operation.
In China, stocks closed up on Wednesday as investors wagered on further stimulus. The Chinese government said on Wednesday it will increase financial, fiscal and taxation policy support to drive consumption.
“The Chinese government and central bank will doubtless have to resort to further stimulus measures in order to shore up the economy. This prospect should lend support to metal prices,” said Commerzbank in a note.
But suggesting low prices are doing little to entice fresh demand for now, copper premiums for metal in Shanghai bond edged down by $ 2.50 to $ 87.50, the lowest since mid August.
A Hong Kong trader said a recent flattening of the Chinese onshore-offshore yuan differential had ended an arbitrage play, hitting metals demand.
Tin closed up 0.7 percent at $ 14,825, resisting pressure from news that top exporter Indonesia has given 13 companies tin export permits after they met new export rules introduced this month.
“The Indonesia news was expected,” said a London-based trader.
Aluminium ended up 0.7 percent at $ 1,518, while nickel ended up 1.7 percent at $ 9,670.
