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In retaliation to US President Donald Trump’s threat last week to slap additional tariffs on $267 billion of Chinese goods, reports suggest that Beijing intends to seek permission from the World Trade Organization to sanction the US for failing to comply with a ruling that deemed some of its anti-dumping rules to be illegal.
Additionally, China is reportedly planning to put off accepting license applications from American companies in financial services and other industries until it sees some progress on trade discussions with Washington, ANZ Research noted on Wednesday.
Nervousness over the worsening tit-for-tat trade spat between China and the US, coupled with strong US Treasury yields – on account of solid US data and higher oil prices – left all of the SHFE base metals in negative territory on Wednesday morning, wiping out the gains made by the metals at the start of this week.
While the US dollar was little changed at 95.13 as at 9am Shanghai time, the market also factored in concerns over the risk of volatility in emerging market currencies, according to Metal Bulletin analyst James Moore.
Nickel led the falls on Wednesday, with the metal’s most-traded November contract sliding 1.2%. Metal Bulletin analyst Andy Farida said the weakness may be attributed to the weaker downstream demand from Chinese stainless steel mills in July.
He noted that based on China’s metal information provider Antaike, China produced a total of 13.6 million tonnes of stainless steel during the first six months of 2018, up 13.2% a year ago. During this period, only 11.2 million tonnes were consumed. “As such, growing inventory of stainless steel stocks pressured domestic mills to reduce production rates and produce a decline in nickel consumption,” Farida said.
Zinc, which started to decline Tuesday, registered another drop of almost 1% for its most-traded November contract. Sister metal lead followed suit, with its most-traded October contract tumbling 0.5%.
Meanwhile, despite a backdrop of supply disruptions and uncertainty over the fate of major Russian aluminium producer, UC Rusal, aluminium’s most-traded November contract slipped 0.5%. Supply tightness in this market is expected to ease soon after Hydro’s Alunorte alumina refinery in northern Brazil signed last week two agreements with local authorities, signaling the refinery is closer to resuming normal operations.
Copper’s most-traded November contract and tin’s most-traded January contract both shed around 0.5% as well.
Base metals prices
Currency moves and data releases