Steel-based metals prices plunge amidst trade tension
Temitayo Ayetoto is Businessamlive Reporter.
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Steel-linked metals, zinc and nickel, fell on Tuesday, hitting multi-month lows as demand worries escalated on Chinese steel price weakness and after hopes of a trade truce with China seemed to have been quashed by United States President Donald Trump.
Steel rebar prices in China, the world’s top metals consumer eased further after touching their lowest since June earlier this week on faltering demand and near-record supply. Zinc is used to stimulate carbon steel while nickel is widely used in stainless steel making.
Trump told the Wall Street Journal he expects to raise tariffs on $200 billion in Chinese imports to 25 percent from 10 percent.
“At this stage macro sentiment is the most important factor. Investors really want to know what’s going on with the China-U.S. deal,” said Casper Burgering, an analyst with ABN AMRO, a Dutch bank. He added that poor macro sentiment was outweighing zinc’s strong fundamentals.
Three-month zinc on the London Metal Exchange hit its lowest since mid-September at $2,422 a tonne, and traded down 1.8 percent in official midday rings at $2,442, while nickel traded down 0.9 percent at $10,775 a tonne, having hit its lowest since last October at $10,720.
The premium of cash zinc to the three-month contract fell to $60 from last week’s two-decade high of $97 but remains unusually high, suggesting a shortage of nearby supply.
Stocks of zinc in LME-registered warehouses have roughly halved to 121,275 tonnes since August, a 10-year low.
The U.S. dollar rose to its highest level in almost two weeks, making dollar-priced metals costlier for non-U.S. investors.
BHP Group has identified a potential new iron oxide, copper and gold mineralized system near its Olympic Dam operations in South Australia as part of a copper exploration program.
In copper traded down 0.9 percent in rings at $6,136, having hit its lowest since mid-November, aluminium traded down 0.9 percent at $1,935, lead was last bid down 0.6 percent at $1,931 while tin was last bid down 1.1 percent at $18,700.