In Commodity News 09/04/2015
Shanghai nickel slid more than 3 percent on Wednesday, echoing losses in London, on concerns that China’s struggling construction sector would corrode demand for the stainless steel ingredient.
“Clearly the market is seeing the general weakness in the Chinese steel market as having a future impact on speciality feed markets as well – nickel has been suffering as a consequence,” said strategist Daniel Hynes at ANZ in Sydney.
“If it continues, then zinc is vulnerable as well.”
The most-traded nickel contract on the Shanghai Futures Exchange had dropped 3 percent to 93,880 yuan a tonne by 0145 GMT, following similar losses in London.
Sentiment has turned increasingly bearish due to China’s struggling property sector, a big user of stainless steel in construction, and closures of regional steel mills due to pollution concerns.
London Metal Exchange (LME) nickel cut early gains of more than 1 percent to trade at $12,635 a tonne, up 0.6 percent and following losses of 3.7 percent on Tuesday when it tumbled towards 6-year lows of $12,310 struck on April 1.
Benchmark LME copper slipped 0.4 percent to $6,044 a tonne, paring 1.4-percent gains from the previous session.
Signs of Chinese consumer demand have emerged, with stocks of cheaper copper brands in Shanghai warehouses dropping quite quickly, said a source at a tradehouse in Shanghai.
“When demand is picking up, you do see end users picking up cheap material … in a week or two we’ll start to see the (exchange) deliverable brand inventories start to decline, and that may lead to stronger bonded premiums.”
Physical prices for spot copper on China’s domestic market have also flipped to a premium against front month ShFE prices this past week, another sign of brightening demand.
The most-traded June copper contract on the Shanghai Futures Exchange was flat at 43,450 yuan ($7,010) a tonne.
Global business activity accelerated at its fastest pace in six months in March, prompting firms to increase headcount at the sharpest rate since the middle of last year, a survey showed on Tuesday.
UK shareholders in BHP Billiton might sell $935 million worth of shares in South32, a company which BHP is planning to hive off, if the new mid-sized mining firm is not eligible for inclusion in benchmark indices, Macquarie warned.
