LONDON, Sept 3 (Reuters) – Nickel sank to its lowest in more than seven months on Monday, weighed down by worries about China’s economy, escalating trade tensions and weak steel prices.
Manufacturing activity in China, the world’s biggest consumer of industrial metals, grew last month at its slowest rate in more than a year, with export orders shrinking for a fifth month and employers cutting more staff, the Caixin/Markit Manufacturing Purchasing Managers’ Index showed.
“I’m surprised that any of the metals are up today, given the combination of the Caixin PMI in China, the lack of progress on NAFTA talks and the tit-for-tat tariff contest between China and the U.S.,” said Caroline Bain, chief commodities economist at Capital Economics in London.
“Nickel is quite tied up with the stainless steel industry, which has been directly affected by tariffs already, so that might be why it has been particularly hard hit.”
Also weighing on nickel, mainly used to make stainless steel, was another fall in construction steel rebar prices in Shanghai after their weakest weekly performance since late March.
Benchmark nickel on the London Metal Exchange tumbled to $12,695 a tonne, its lowest since Jan. 23, before recovering to $12,790 by the close of open-outcry trading. That represented a decline of 0.1 percent, adding to Friday’s 3.7 percent fall.
* COPPER: LME copper slipped to its weakest since Aug. 23 at $5,950.50 a tonne before paring losses to end at $5,967, down 0.1 percent. Prices on Friday fell 1.5 percent to take August’s decline to 5.5 percent. It was the biggest monthly drop in two years and the third monthly fall in a row.
* TRADE DISPUTES: Historically, a 1 percentage point decline in global trade growth has reduced copper prices by about 4 percent, analyst Michael Widmer at Bank of America Merrill Lynch said in a note.
“If global trade growth fell from April’s 4.4 percent YoY to the 2015/16 average of 1.7 percent, copper prices could correct by 10.8 percent YoY to $5,400/t.”
* ZINC: Three-month zinc rose 0.2 percent to finish at $2,463 a tonne. “We note the sharp rise in reported Shanghai zinc CIF premiums from $160/tonne to $230,” Alastair Munro, of broker Marex Spectron, said in a note.
* LEAD: LME lead was the strongest performer, climbing 2.1 percent to close at $2,121 a tonne as inventories continued to fall. It touched an intraday peak of $2,131.50, the strongest since Aug. 9.