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The broad sell-off this morning follows a deepening of US-China trade tensions on Wednesday after the US government filed plans to raise import tariffs on $200 billion worth of Chinese goods from 10% to 25% on Friday. In turn, the Chinese government warned that it was prepared to raise tariffs on American goods in response.
“Risk-off sentiment continues to dictate appetite for risk assets amid growing fears that a trade deal between the United States and China could fall through despite continued negotiations this week,” Fastmarkets MB analyst Andy Farida said.
“Such a prospect has rattled global investors’ confidence, causing a broad-based sell-off in global equity indices and having a negative impact on base metal prices,” Farida added.
Nickel was the worst performer of the SHFE base metals this morning, with weak demand from the downstream stainless steel sector adding to the downside for the metal’s price.
The most-traded June nickel contract slid to 95,350 yuan ($14,065) per tonne as at 10.15am Shanghai time, down by 1% or 970 yuan per tonne from Wednesday’s close of 96,320 yuan per tonne.
“Compounding the bearish momentum is evidence that growing supply of stainless steel stocks in China is becoming a major headwind. Ample stocks of stainless steel in China continue to weigh on the demand outlook for nickel,” Farida said.
Zinc was similarly down this morning, tracking the weakness seen in the London Metal Exchange’s three-month zinc price at the close on Wednesday following continued inflows of material into LME-registered sheds in Europe.
The most-traded June zinc contract price dropped to 21,040 yuan per tonne as at 10.15am Shanghai time, down by 0.8% or 170 yuan per tonne from Wednesday’s close of 21,210 yuan per tonne.
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