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Copper and nickel fall in slim trade as caution grips market

Copper and nickel prices eased on Tuesday as trading volumes remained anaemic due to investor caution over Russia’s invasion of Ukraine and a large short position in nickel.

Benchmark three-month nickel on the London Metal Exchange (LME) CMNI3was down 2.2% at $32,005 per tonne by 1030 GMT. Three-month copper CMCU3 lost 0.6% to $10,276.

Liquidity on the LME, the world’s largest and oldest venue for metals trading, has been low, especially in nickel, which resumed trading on March 16 after a short squeeze forced a closure, traders and analysts said.

“Many people are taking a ‘wait and see’ stance due to this volatility and the liquidity shortage that started in nickel but has spread to other metals,” said Amelia Fu, Bank of China International’s (BOCI) head of global commodities strategy.

“(Base metals) price movements are still centred around the lack of liquidity and Ukraine situation.”

The large nickel short position held by China’s Tsingshan Holding Group, a major producer, was causing caution among participants, analysts said.

In Shanghai, nickel SNIcv1 dropped 3.8% to 217,290 yuan ($34,111) a tonne.

CRISIS: Air raid sirens sounded across Ukraine before dawn on Tuesday as Ukrainian and Russian negotiators met in Turkey for the first face-to-face talks in nearly three weeks, with Kyiv seeking a ceasefire without compromising on territory or sovereignty.

Sanctions on Moscow have boosted base metals prices on supply concerns as Russia is a major producer of nickel, aluminium and copper.

LOCKDOWN: China’s financial hub of Shanghai launched a planned two-stage lockdown to contain a coronavirus surge, keeping a lid on copper prices in the world’s largest consumer of the metal.

CODELCO: Chile’s Codelco, the world’s largest copper producer, is preparing to offer the market some “non-core” exploration assets, signalling a rare privatisation for the state-owned mining firm, a senior executive said on Monday.

EXCHANGE: The LME board will see what lessons can be learnt from this month’s chaotic nickel trading, the chief executive of its parent company Hong Kong Exchanges and Clearing said on Tuesday.

OTHER PRICES: LME aluminium CMAL3 rose 0.7% to $3,588 a tonne, lead CMPB3 gained 0.1% to $2,372, zinc CMZN3 advanced 0.1% to $4,093 and tin CMSN3 was down 0.2% at $42,455.
Source: Reuters (Reporting by Zandi Shabalala; Additional reporting by Naveen Thukral; Editing by Jan Harvey)

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