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The exceptions to this morning’s rangebound trading were tin, which continued to weaken, and nickel, which managed a slight uptick.
The dollar index, at 97.42 as at 9.33am Shanghai time, remains in high ground and it draws ever closer to the peak of 97.70 reached on November 12.
The dollar index was little changed this morning after investors paused to digest a speech by US Federal Reserve vice-chairman Richard Clarida on Tuesday in which he expressed a cautious view about how the central bank should proceed in raising interest rates.
“A monetary policy strategy must find a way to combine incoming data and a model of the economy with a healthy dose of judgment — and humility! — to formulate, and then communicate, a path for the policy rate most consistent with our policy objectives,” Clarida said.
Elsewhere, recent remarks from US President Donald Trump suggesting that he will not back down on the imposition of further trade tariffs against China has further dampened sentiment in base metals markets.
During an interview with the Wall Street Journal earlier this week, Trump said it was “highly unlikely” that he would heed a call by Beijing to refrain from increasing the tariffs from the start of next year.
The move would see existing 10% US import tariffs on $200 billion worth of Chinese goods increase to 25% from January 1, 2019.
Trump’s comments come just days before a summit with Chinese President Xi Jinping in Argentina, at which market participants had been hopeful that some meaningful progress toward a resolution in the trade war between the United States and China would be made.
The firmer dollar and persisting risk-off sentiment in the market continued to keep base metals prices on the SHFE under pressure.
Tin was the worst performer of the SHFE base metals this morning, with the metal’s most-traded January contract declining to 143,460 yuan ($20,639) per tonne as at 9.32am Shanghai time, down by 1,110 yuan per tonne or 0.8% from Tuesday’s close.
“Many market participants are taking a wait-and-watch stance right now amid the uncertain market situation and the rising stocks, which had weighed on [the tin] price,” Citic Futures Research said.
Tin stocks on the SHFE rose by 528 tonnes to 8,716 tonnes in the week to November 23, reflecting a significant year-to-date rise of 64%.
In addition, the global refined tin market is expected to swing to a small surplus next year due to a contraction in China’s consumption, according to Fastmarkets research analyst Boris Mikanikrezai.
Elsewhere, nickel managed to shrug off the pressure stemming from a firm dollar and global trade tensions, with the metal’s most-traded January contact climbing 760 yuan per tonne or 0.9% to 89,450 yuan per tonne.
“Rumors that the overseas ferro-nickel producers may encounter capacity cuts might provide some support to the metal’s price,” Citic Futures Research noted.
Base metals prices
Currency moves and data releases