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As has been the case for much of this week, the base metals seem content to drift while they await direction from high-level trade talks between China and the United States that are scheduled to resume later on Thursday.
Adding to this is the fact that there has been a flurry of conflicting reports regarding developments in the US-China trade war, which is keeping participants from becoming too optimistic that a near-term deal is likely.
“The Financial Times reported that China had offered to buy another 10 million tonnes of soybeans from the US, in an apparent olive branch to unlock stalled talks and head off increased tariffs by the US on October 15,” Jeffrey Halley, senior market analyst at online trading services provider Oanda, said in a morning note.
“Not to be outdone though, the South China Morning Post and Reuters have published stories after the New York close that suggest the deputy-level talks this week had yielded no progress,” Halley added.
As such, the base metals traded on the SHFE were mixed this morning. The most-traded November copper and aluminium and January tin contracts weakened slightly, while the rest ticked upward.
Zinc gave the best performance of its peers, with the metal’s most-traded November contract rising to 18,805 yuan ($2,635) per tonne as at 11.06am Shanghai time, up by 145 yuan per tonne – or 0.8% – from Wednesday’s close of 18,660 yuan per tonne.
The more pronounced strength in zinc comes amid continued drawdowns SHFE stocks since the beginning of September. Deliverable zinc stocks at SHFE-registered warehouses totaled 64,095 tonnes on September 30, a decrease of 15,699 tonnes – or 19.7% – from the 79,794 tonnes recorded on September 6.
Similarly, zinc stocks at Shanghai-bonded sheds declined last month amid a recovery in demand typically seen in September. Shanghai-bonded zinc stocks totaled 80,300-87,300 tonnes on September 27, down from 87,500-94,500 tonnes the previous month, according to Fastmarkets’ latest assessment.
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