Zinc and nickel prices gained on Wednesday as inventories in London Metal Exchange warehouses hit fresh lows, but other industrial metals dipped on uncertainty about global demand.
Low inventories of many metals in LME-registered warehouses are helping to bolster prices despite weak economic data from top metals consumer China, said Ross Strachan, senior commodities economist at Capital Economics in London.
“The exchange stocks being at very low levels are understandably keeping many market participants on edge about the outlook when there has been speculation that a (U.S.-China) trade deal is near,” he said.
“We’re still expecting very sluggish demand growth across the metals and we think that will be a major drag on prices,” he said. “In fact you could see exchange stocks rise significantly later in the year.”
Prices may also be getting some support from investors betting on a dovish statement by the U.S. Federal Reserve later on Wednesday, some analysts said.
Benchmark zinc was the biggest LME gainer, rising 1 percent to $2,845 a tonne by 1100 GMT, while nickel added 0.5 percent to $13,260.
- ZINC/NICKEL STOCKS: LME zinc inventories MZNSTX-TOTAL, down 55 percent this year, touched their lowest since October 2007, while LME nickel stocks MNISTX-TOTAL fell to the weakest since June 2013, LME data showed on Wednesday. Inventories in China, however, are more plentiful.
- AMBATOVY: Nickel also got support after Japanese trading house Sumitomo Corp said on Wednesday its Ambatovy nickel plant in Madagascar had been forced to shut for about two weeks in early February and may miss its revised annual production target.
- NORSK HYDRO: LME aluminium touched a fresh three-month peak of $1,951.50 a tonne, but was later down 0.1 percent to $1,943.50 a tonne after major producer Norsk Hydro said it had made some progress in restoring operations after it was hit by a ransomware cyber attack.
However, the company was not yet back to normal, it said.
- ALUMINIUM OUTPUT: Global primary aluminium output fell to 4.92 million tonnes in February from a revised 5.411 million tonnes in January, data showed on Wednesday.
- TRADE: U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin plan to travel to China next week for trade talks with Chinese Vice Premier Liu He, a U.S. official said on Tuesday.
- PRICES: LME copper added 0.1 percent to $6,463 a tonne and lead rose 0.1 percent to $2,039, while tin edged down 0.02 percent to $21,270.