ZINC has surged almost six per cent after top Chinese smelters agreed to cut output in 2016 by 500,000 tonnes, but gave up the bulk of gains on scepticism over whether shortages would kick in.
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Three-month zinc on the London Metal Exchange failed to trade in closing open outcry activity and was bid up 2.2 per cent at $US1580.50 a tonne. Zinc’s rally initially spilled over into other metals, but many retreated by the close, including nickel. Production cuts announced by Chinese zinc smelters last week will do little to tighten next year’s global supply-demand balance in refined metal because already-known mining cutbacks would have forced smelters to reduce production anyway.
While stockpiles of the metal in warehouses monitored by the LME are at the lowest level since December, they’re still nearly five times larger than they were four years ago.
Nickel has fallen on a poor outlook for its struggling steel sector as well as a strong dollarand China’s slowing growth.
Nickel is the first metal falling below its 2009 low. “Clearly the demand side remains extremely weak”, said Dominic Schnider, analyst at UBS Wealth Management in Hong Kong. The LME’S three-month nickel contract was down 4.9% at $8,300 a ton.
The above graph is line chart of LME metal index from Jan 2015 till date.
“It seems that for the moment the bears have taken a rest, and after yesterday’s selloff there even seems to be some modest short covering”, Malcolm Freeman, a director of West Malling, England-based brokerage Kingdom Futures, said in an emailed note.
LONDON, Nov 24 Zinc, copper and nickel rebounded on Tuesday as bearish investors bought back positions to lock in profits while a weaker dollar and firmer oil also supported the hard-hit market.
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Aluminium ended barely changed at $1,446 a tonne, up 0.04 percent, lead finished up 2 percent at $1,607 and tin added 0.5 percent to $14,425.
