Nickel led base metals prices higher on Monday after positive factory data from top steel producer China raised hopes for higher demand, while inventories fell.
Factory activity in China unexpectedly grew for the first time in four months in March, an official survey showed on Sunday, suggesting government stimulus measures may be starting to take hold in the world’s second-largest economy. Benchmark nickel jumped 2.2 per cent to $13,265 per tonne by 0955 GMT, on track for its biggest daily percentage gain in more than a month.
“(The rise) seems to be because of the improved PMI numbers over the weekend,” said Macquarie base metals strategist Vivienne Lloyd, adding that the sentiment had boosted base metals.
On-warrant stocks of nickel available to the market in LME-approved warehouses are at 114,738 tonnes, their lowest since 2012 and down 11 per cent so far this year. Inventories in warehouses monitored by the Shanghai Futures Exchange stood at 8,718 tonnes, having halved since the middle of November. But cash nickel on the LME is trading at a discount of nearly $90 to the three-month contract, indicating stock levels remain high.
Macquarie expects a deficit of 58,000 tonnes in the nickel market this year, compared to a shortage of 243,000 tonnes in 2018.
Boosting sentiment in metals were remarks by the US President Donald Trump that trade talks with China were going very well.
LME copper gained 0.4 per cent to $6,506.50 a tonne; aluminium rose 0.4 per cent to $1,921; lead added 0.8 per cent at $2,034, while tin inched 0.5 per cent higher to $21,505.