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Zinc was the lone metal in negative territory with a decline of 1.03%, while the others were up: aluminum (+0.04%), copper (+0.07%), lead (+0.12%), nickel (+0.31%) and tin (+0.98%).
This slight strength in the base metals follows persistent weakness in the US currency since a flare up in tensions between the United States and China at the end of last week, when US president Donald Trump threatened fresh tariffs on $300 billion of Chinese goods.
The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, stood at 97.36 as at 10.57am Shanghai time. This is down from a recent high of 98.94 on August 1.
“The dollar index is under pressure because the uncertainty brought about by the US-China trade war is making investors more risk-averse,” a macroeconomic analyst based in Shanghai said.
On Monday, the yuan passed the seven-per-dollar level for the first time since 2008, prompting President Trump to accuse China of manipulating its currency and further intensifying tensions between the two countries.
“Recent events suggest a US-China trade deal is unlikely to be reach any time soon and indeed it seems reasonable to expect trade tension to get worse before they get better,” Rodrigo Catril, currency strategist at National Australia Bank, said on Tuesday.
With such a negative outlook toward a resolution in the US-China trade conflict, gains in the base metals have been limited this morning.
In nickel, growing speculation that the Indonesian government may bring forward a proposed ban on exports of unprocessed nickel ore is fueling fears that supply of nickel ore may tighten, in turn providing support to the metal’s price.
The most-traded October nickel contract on the SHFE stood at 118,010 yuan ($16,829) per tonne as at 10.33am Shanghai time, up by 370 yuan per tonne, or 0.31%, from Monday’s close. The contract had earlier hit a 14-month high of 119,640 yuan per tonne during morning trading on Tuesday.
“Although speculation that Indonesia is about to ban nickel ore exports or is about to stop granting more export quotas is circulating the industry, there has been no official decision and it takes time for such a decision to be carried out. The price of nickel lacks fundamental support so we can only regard the price rally as hype,” Yanqing Wang, analyst at Citic Futures, said.
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