Base metals on the London Metal Exchange (LME) have mostly closed higher after durable goods orders data in the US overrode ongoing jitters regarding the Chinese interbank market.
At the close of open-outcry trading in the London ring on Friday, LME three-month copper was 0.1 per cent higher on the day at $US7,185 a metric ton.
Aluminium rose 1.0 per cent to close at $US1,881 a ton. But nickel closed lower as analysts said inventories of the metal continued to build, weighing upon the metal’s fundamental outlook. LME three-month nickel fell 0.5 per cent to close at $US14,575 a ton.
The metals had initially edged lower early Friday amid lingering fears that China, the world’s biggest consumer of copper and aluminum, may face another round of monetary tightening that would crimp demand.
“Markets anticipate that the Chinese interbank market could play havoc with its manufacturing industry,” said IG Markets.
“The cost of borrowing for Chinese banks is at its highest for four months and traders are worried it could hit all businesses.”
Later in the session, prices recovered after US orders for durable goods — products such as refrigerators and computers expected to last longer than three years — rose 3.7 per cent in September from August. That marked the second consecutive monthly increase and the sharpest jump since June, stoking hopes for improved industrial metal demand for these applications. Analysts had expected new orders to rise by 2.5 per cent in September.
Even so, a closer look at the figures revealed that a surge in aircraft orders masked a drop in demand for other expensive factory goods in September, reflecting a pullback by companies in the weeks leading up to the partial government shutdown. As such, gains for most metals were limited.
Nickel bucked the overall positive LME trend, and fell.
“Nickel is under selling pressure, with resistance on approach of $15,000 a ton great,” noted Standard Bank analyst Walter de Wet.
“Given that inventory in LME warehouses continue to build, we believe resistance will remain strong.”
He noted that inventories of flagship LME metal copper continued to decline, which is likely to be interpreted as supportive for prices.
“Much of the metal continued to move out of the LME warehouse in Johor, Malaysia, with metal in Johor having declined by 36,450 tons since the start of the month,” he said.
“With refined copper demand fairly robust in China (although not shooting the lights out), we have seen bonded inventory being drawn down.”