Base Metals Gain Amid China Restrictions
August 16 2017 - 10:15AM
Dow Jones News
By Marina Force
Copper prices jumped Wednesday, along with the other base
metals, as restrictions on Chinese refiners bolstered the
market.
Copper for September delivery was recently up 2% at $2.9400 a
pound on the Comex division of the New York Mercantile Exchange, on
track to close at a one-week high.
China's cuts to its refining capacity amid a pollution crackdown
are pushing the base metal complex up, said Ole Hansen, commodity
strategist at Saxo Bank.
The monthslong rally in steel prices is also spilling over
markets for steel making raw materials, Mr. Hansen added. Zinc,
used for galvanizing steel, hit a decade-high Wednesday. The London
Metal Exchange's three-month contract rose 4.2% to $3,087.00 a
ton.
China Hongqiao, the world's biggest aluminum producer, confirmed
on Monday it had closed 2.68 million tons of smelting capacity,
equivalent to 4.5% of global output last year.
"The closed capacities are to be replaced by new capacities, and
the company claims that production remains unaffected," Commerzbank
said in a morning note. However, "the news still appears to be
regarded as a good reason to buy," it said.
As base metals climbed, investors were debating how far the
rally had to run. "It looks limited, especially for copper which
has been receiving some selling the last few days on profit-taking
after quite a strong buildup," Mr. Hansen said.
Gold for December delivery fell 0.3% to $1,275.50 a troy ounce
in New York, as investors awaited minutes from the U.S. Federal
Reserve's latest meeting Wednesday.
Adding to gold's headwinds were better-than-expected U.S. retail
sales data, which fueled confidence in the country's economy. A
stronger dollar has pushed the precious metal lower recently as
well, making dollar-denominated metals more expensive for other
currency holders. The WSJ Dollar Index was recently up 0.1% at
86.76.
Stephanie Yang contributed to this article
Write to Marina Force at marina.force@dowjones.com
(END) Dow Jones Newswires
August 16, 2017 10:00 ET (14:00 GMT)
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