Base metals rise on stimulus measures, China demand optimism

Prices of base metals broadly rose on Thursday as traders found comfort in fresh stimulus measures and on the prospects of improved demand from China’s construction sector towards the end of the rainy season.

Three-month zinc on the London Metal Exchange CMZN3 was up 0.6% at $3,117.50 a tonne, as of 0618 GMT, and the most-traded October zinc contract on the Shanghai Futures Exchange SZNcv1 advanced 0.9% to 24,875 yuan ($3,509.65) a tonne.

China’s Shanghai city on Tuesday announced 1.8-trillion-yuan investment worth of infrastructure projects, echoing national policymakers’ calls to revive sluggish economic growth hurt by the COVID-19 pandemic, a property downturn, weak domestic demand, and a fading trade outlook.

The construction industry consumes a vast amount of metals.

“Onshore (Chinese) sentiment is largely positive. It’s also a function of people deploying capital post FOMC (Federal Open Market Committee) event,” said analyst Zenon Ho at broker Marex, referring to the U.S. Federal Reserve’s rate hike.

Fed Chair Jerome Powell vowed on Wednesday to beat down inflation, as the U.S. central bank raised interest rates by three-quarters of a percentage point for a third straight time and signaled that borrowing costs would keep rising this year.

LME tin CMSN3 increased 1.6% to $21,500 a tonne, aluminium CMAL3 advanced 0.4% to $2,212 a tonne, lead CMPB3 increased 0.9% to $1,853.50 a tonne, while copper CMCU3 eased 0.2% to $7,674 a tonne.

ShFE copper SCFcv1 edged up 0.1% to 62,600 yuan a tonne, tin SSNcv1 increased 2.4% to 185,360 yuan a tonne, and lead SPBcv1 advanced 0.3% to 15,015 yuan a tonne.

The global refined copper market showed a 30,000-tonne deficit in July, bringing the deficit level in the first seven months of the year to 126,000 tonnes, International Copper Study Group data showed.

The global zinc market was in a surplus of 83,000 tonnes in the first seven months of 2022, while the lead market was over-supplied by 25,000 tonnes in the same period, data from the International Lead and Zinc Study Group showed.
Source: Reuters (Reporting by Mai Nguyen in Hanoi; Editing by Sherry Jacob-Phillips)