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Wednesday’s interest rate increase by the US Federal Reserve has bolstered the dollar, with the index at 94.98 as at 10.11 am Shanghai time. This compares with 94.28 at roughly the same time on Monday.
Moreover, with the looming Golden Week holiday in China next week, many investors were heard to be closing their positions toward the end of this week.
“A lot of traders will be generally selling this week to reduce their risk when they start trading in the fourth quarter,” a China-based analyst said.
Additionally, the prospect of reduced demand during China’s weeklong National Day break from October 1 has also dented sentiment in the base metals markets.
As a result, the SHFE base metals complex was split into two camps with weakness seen in aluminium, copper and nickel prices, while the rest were in positive territory.
Nickel was the worst performer of its peers; the metal’s most-traded November contract fell to 103,360 yuan ($15,012) per tonne as at 10.11am Shanghai time, down by 0.7% or 770 yuan per tonne from Thursday’s closing price.
Conversely, lead was the star performer during trading on Friday morning, with the metal’s most traded November contract climbing 0.8% or 145 yuan per tonne to 17,985 yuan per tonne.
Lead prices were likely supported by the relatively strong performance witnessed on the London Metal Exchange on Thursday, where the exchange’s three-month lead price ended the day 1.2% higher at $2,010 per tonne. But LME prices remain in low ground, hovering near the $2,000-per-tonne support level.
Additionally, SHFE lead prices could be finding support from declining on-exchange stock levels – indicative of a tightening market, according to an analyst with Guotai Junan Futures.
SHFE lead stocks are down significantly from the beginning of the year; stocks stood at 14,555 tonnes at the end of last week, down 65% from the 41,816 tonnes recorded on January 5.
LME lead stocks have exhibited a similar trend through this year, albeit to a more modest extent. LME lead stocks totaled 116,300 tonnes on Thursday, down 18% from 142,225 tonnes on January 2.
The strength in lead dragged sister-metal zinc higher, while tin also registered slight gains this morning.
Base metals prices
Currency moves and data releases