Base metals: Chinese liquidity boost causes positive start into the week
by David Fleschen
At the beginning of the new trading week the metal prices all move up. Copper rises to USD 6,400 per tonne, zinc costs USD 2,400 and nickel rises to USD 14,500. The rise in the price of metals is attributed to the measures of the Chinese central bank (PBoC), which has pumped CNY 700 billion (equivalent to a good USD 100 billion) into the financial system. The PBoC's action has led to rising Chinese stock markets, which are providing support for metal prices. The weaker US dollar is also helping. On the other hand, demand risks as a result of possible new lockdowns are being ignored after the World Health Organization yesterday reported more new Covid 19 infections worldwide in one day than ever before. The review of the Phase 1 agreement between the US and China, originally planned for last weekend and now postponed indefinitely, is also being ignored. The testimony would probably not have turned out well anyway, as China is clearly lagging behind its promised purchases of US goods.
Nickel is the second largest winner among the base metals this morning after zinc, after having already gained strongly on Friday. It is approaching its annual high from the week before last. According to information from the authorities last week, nickel mine production in the Philippines fell in the first half of the year by 27% compared to last year. This is due to the Corona Pandemic. Previously the Chinese state research institute Antaike had announced that nickel mine production in China could fall by 18% this year, as there is not enough nickel ore. This week the International Nickel Study Group (INSG), as well as the other industry associations, are publishing new supply and demand data for the respective metal markets. The INSG had reported a high surplus supply for the first five months of the year.
Source: Commerzbank Research, Photo: Fotolia