Base metals hit multi-month peaks on China stimulus hopes, dollar
Base metals prices rallied on Monday on bets for a weaker dollar and expectations that top metals buyer China will make further moves to stimulate its economy, while nickel hit an eight-month high as worries over possible mine closures in the Philippines persisted.
Meanwhile the price of tin hit a 16-month high at $18,125 a tonne on near-term supply tightness, as metal for delivery on Tuesday versus Wednesday traded at a premium of $19.50 a tonne, its highest since August last year CMSNT-0.
Copper and aluminium hit two-month tops while lead hit a five-month peak.
The dollar index was little changed, though bets on further rate hikes continue to recede following last month’s shock British vote to leave the European Union.
A weak dollar makes dollar-priced metals cheaper for non-U.S. investors.
Three-month copper on the London Metal Exchange dipped 0.2 percent to $4,903 at 1409 GMT, having earlier hit $4,960 a tonne, its highest since May 3.
“Nothing is happening in Europe regarding negotiations (following Britain’s vote to leave the European Union) so the market is focusing on the dollar and what’s happening in China,” said Citi analyst David Wilson.
Chinese share prices rallied on Monday on higher commodity prices and hopes for more action to stimulate the economy after data on Friday showed growth in the manufacturing sector stalled in June.
China’s central bank said on Monday that it would use various policy tools to maintain appropriate liquidity and reasonable growth in credit and social financing.
Outside China, stimulus hopes could be stoked this week after the Bank of England publishes its quarterly financial stability report on Tuesday and the minutes of the U.S. Federal Reserve’s June monetary policy meeting are released on Wednesday.
“Metals have sailed through the Brexit-related choppiness more or less unscathed. The potential for quantitative easing … along with the lack of a Fed rate hike have given prices some support,” said ICBC Standard Bank in a note.
Nickel hit $10,410 a tonne on Monday, its highest level since late October, helped by news on Friday that the Philippines, the top supplier of nickel ore to China, will review all mines operating in the country.
Tin traded up 3.2 percent at $18,035. LME data showed one entity holding between 50-80 percent of LME tin for Tuesday delivery and LME warrants or physical metal ownership titles.
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