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The dollar index, at 95.33 as at 9.56am Shanghai time, is up considerably from last Thursday’s low of 94.98. Last week’s weakness in the dollar came amid a massive stock market sell-off triggered by worries over rising interest rates and the continuing trade war between China and the United States.
Lingering caution in markets following the global sell-off last week continues to dampen investor appetite this morning and thus is pressuring base metals prices.
Meanwhile, concerns over the ongoing US-China trade war also continue to dent risk sentiment in Asia.
Fastmarkets analyst James Moore said that while China has shown some resilience to the escalating trade tensions with the US – as reflected by the 14.5% and 14.3% year-on-year increase in September exports and imports, respectively, as well as by the China-US trade surplus hitting a fresh all-time record last month – he warned that this positive performance could spark another round of tariffs from US President Donald Trump.
Zinc showed the biggest decline, with its most-traded November contract price slipping 0.9% to 22,650 yuan ($3,272) per tonne. Downstream signals from the automotive and construction sectors have shown signs of slowing, Moore said. Zinc premiums in Asia also dropped last week as demand weakened after the London Metal Exchange-SHFE import arbitrage window closed.
Aluminium’s most-traded November contract price dipped 0.8% to 14,195 yuan per tonne. Concerns over supply disruptions eased when Hydro recently reversed its decision to temporarily shut its Alunorte refinery in Brazil and decided to keep it running at 50% production capacity. Moreover, more stocks flowed into SHFE-approved warehouses last Friday; inventories rose to 842,676 tonnes at the end of last week, up by 10,420 tonnes from 832,256 tonnes on September 28.
Tin’s most-traded January contract price declined by 0.6%, while nickel and copper’s most-traded November contract prices were little changed.
Lead bucked the weaker tone witnessed in its peers, with its most-traded November contract price rising 1.7% to 18,910 yuan per tonne.
According to Fastmarkets analyst Andy Farida, lead is likely to get further boost from its existing tight fundamental backdrop.
Total lead mine output has declined by 114,000 tonnes or 4.2% compared to a year ago, Farida noted.
“We suspect 2018 mine output to secure its fourth annual decline—indicating that there is continued tightness in the availability of lead ores and concentrates. With less raw materials available, lead smelters will find it challenging to produce sufficient refined metal in the coming weeks,” he said.
Base metals prices
Currency moves and data releases