'Economic Stress In China May Hit Demand For Base Metals'

SINGAPORE — Most industrial metals climbed on Monday on better-than-expected data from major consumer China, while nickel prices were boosted by supply worries from major producer Indonesia.

China’s June industrial output climbed 6.3% from a year earlier, beating a 5.2% forecast, while January-June fixed-asset investment rose 5.8% from the same period last year, surpassing a 5.5% increase forecast by analysts.

“This is a big relief. It seems that the government’s support has eventually had some positive impact on the economy, especially in the seasonally weak month of June,” said analyst Helen Lau of Argonaut Securities.

“A big overhang for copper is demand, and now we see some demand recovery,” she said.

China’s growth in April-June, however, slowed to 6.2% from a year earlier, the weakest in at least 27 years and in line with expectations, but Lau said the number is actually positive as the government “was ready for numbers even below 6%.”

“(GDP growth) may be weak historically, but it’s … slightly positive from my view; (6.2%) is priced in. The 6% 30 years ago is nothing compared with 6% now,” said a Singapore-based trader.


* COPPER: Three-month copper on the London Metal Exchange was up 0.9% at $5,989.50, as of 0716 GMT, while Shanghai copper settled up 0.5% at a two-week high of 46,780 yuan ($6,807.43) a tonne.

* NICKEL: Shanghai nickel surged as much as 3.1% to 106,620 yuan a tonne, its highest since Sept. 3, 2018, but retreated slightly later in the session to close 2.4% higher. London nickel fell 0.6% after rallying in early Asian trading hours, hovering around a four-month high.

* INDONESIA: Investors were concerned of nickel supply amid fresh reports that Indonesia, a major producer of nickel ore used in the stainless steel industry, would stick to its plan to re-impose an ore export ban from 2022.

* “Indonesian nickel ore export ban stoked fears of supply tightness, though the ban is for 2022 and will not impact immediate availability of the metal ore,” said ANZ in a note.

* PRICES: London aluminum advanced 0.5%, while zinc eased 0.2% and lead edged up 0.3%. In Shanghai, aluminum climbed 0.8%, zinc rose 0.8%, while lead dipped 0.1%.

* CHINA ALUMINIUM: China’s daily aluminum output hit record levels in June, according to Reuters calculations, even as total production for the whole of the month fell slightly, official data showed.

* CHINA PROPERTY: Growth in China’s new home prices cooled in June as sales shrank for a second month, but building starts and investment quickened, providing a cushion for the slowing economy while Beijing claims some wins in reducing market froth.

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Three month LME copper

Most active ShFE copper

Three month LME aluminum

Most active ShFE aluminum

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

ARBS ($1 = 6.8719 Chinese yuan)

(Reporting by Mai Nguyen, Editing by Sherry Jacob-Phillips and Subhranshu Sahu)

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