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The base metals complex recouped some of the ground it lost over the week after the US announced it is restarting negotiations with China after a two-month impasse and escalating tit-for-tat tariffs that kept the market teetering on the edge of a possible full-on trade war.
“Market participants see such a gesture as a positive move to benefit both nations, following from a successful conciliatory EU-US trade deal in July,” Metal Bulletin analyst Andy Farida said.
China is expected to send a delegation to the US led by Vice Commerce Minister Wang Shouwen in late August. Although market participants remain skeptical about how this low-level trade discussion could diffuse rising tensions between the two countries, this small progress helped spark some investor appetite.
Providing further support to the base metals this morning was a slightly weakening of the dollar; the dollar index was recently at 96.60 on Friday morning, still in relatively high ground but down from a peak of 96.99 reached on Wednesday.
Nickel demonstrated the biggest improvement with its most-traded October contract up by 1.4%. Farida noted that the steady drawdown in global stocks from both the London Metal Exchange- and SHFE-approved warehouses are bullish elements that are helping support the market.
“There is less idle metal around while global underlying demand for nickel remains fairly strong in 2018,” he added.
Zinc, which fell the most on Thursday, rebounded this morning with its most-traded October contract rising by 0.9%.
Copper followed closely with its most-traded October contract bouncing 0.7% as the market downplayed the bearish impact of improved negotiations between BHP and Escondida mine workers that has dogged the red metal this week.
Aluminium was up the least this morning, with its most-traded October contract ticking up by 0.2%. According to Farida, the underlying fundamentals for this metal remain supportive; Metal Bulletin Research expects the global aluminium market to record a deficit of 713,000 tonnes this year.
Base metals prices
Currency moves and data releases