The stronger manufacturing PMI data from the US and China, along with a soft USD has kept the base metals complex buoyant. LME 3M copper managed to close above US$10,000/t for a third consecutive day, while aluminium touched an intra-day high of US$2,508/t, with continued support from the intensified production curbs from China’s Yunnan province due to power shortages. Japanese aluminium buyers settled premiums at US$185/t for 3Q21, a rise of 25% from the current quarter, and the highest quarterly premium seen since 2Q15. The rebound in the premium was widely expected with recovering demand and tight supplies.
The ongoing power issue in Yunnan has also affected the zinc market, with smelters in the region running at an average of 70% of their nameplate capacity, according to Antaike. The group estimates that this will lead to refined zinc production losses of around 20kt over June.
LME nickel traded back above US$18,000/t touching an intraday high of US$18,410/t – the highest level seen in three months. Prices crashed in early March after China’s Tsingshan announced that it would commercially produce Class 2 nickel from nickel pig iron, leaving the battery metal the worst performer among LME base metals. However, a stronger stainless steel market in both China and Indonesia has supported the recovery in prices.
Finally, SGX iron ore futures bounced back above US$200/t yesterday, the highest level in two weeks, after a major steel-making hub in China indicated it might ease production curbs, providing hope for higher raw material consumption. As per the latest market updates, local authorities in Tangshan city are planning to ease restrictions around iron smelting and lift emission controls to cool down the recent rally in steel prices. However, there has not been any official confirmation of this.