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News that a delegation from China will meet with US officials this week to work on plans aimed at ending a trade dispute between the two nations gave the base metals market some reprieve from the broad-based selling witnessed last week, with risk-on sentiment returning this morning and with it some buying.
“This has given markets some reason for optimism that a de-escalation of Sino-US trade tensions is possible one side or other of November’s US mid-term elections,” Ray Attrill, head of foreign exchange strategy at the National Australia Bank, said in a morning note.
A softer dollar has also provided support to base metals prices this morning.
Though the dollar index remains in relatively high ground, at 96.17 as at 10:19 am Shanghai time, the index is down significantly from a high of 96.99 reached on August 15.
Nickel was the outperformer during morning trading on Monday, with its bullish fundamental backdrop continuing to support prices; the metal’s most-traded November contract soared to 111,830 yuan ($16,263) per tonne as at 10.20 am Shanghai time, up by 1,740 yuan per tonne or 1.6% from last Friday’s close.
“I’ve heard the [Chinese] government is going to conduct another round of environmental inspections in the northern provinces, such as Inner Mongolia. Nickel production might be lower than expected, which would support elevated nickel prices,” a Beijing-based analyst said.
In addition, significant drawdowns in on-exchange nickel stocks are also supportive; combined stocks at London Metal Exchange- and SHFE-listed warehouses have fallen 35.8% so far in 2018, down to 264,638 tonnes as of August 17, compared with the 411,992 tonnes seen at the end of 2017.
Base metals prices
Currency moves and data releases