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|13 June, 2018

METALS-Base metal prices fall ahead of Fed rate decision

Base metals prices fell on Wednesday, led by Shanghai aluminium, which touched a six-week low

Image used for illustrative purpose. Steel rebar is pictured at the Ariel Metal steel trader warehouse in Podolsk outside Moscow, Russia February 9, 2018.

Image used for illustrative purpose. Steel rebar is pictured at the Ariel Metal steel trader warehouse in Podolsk outside Moscow, Russia February 9, 2018.

REUTERS/Maxim Shemetov

BEIJING - Base metals prices fell on Wednesday, led by Shanghai aluminium, which touched a six-week low, as investors fretted over liquidity in China and awaited news from the U.S. Federal Reserve's policy meeting.

The Fed is expected to raise interest rates at its meeting. Higher rates usually cause the dollar to strengthen, which would make dollar-denominated metals more expensive for holders of other currencies and could weigh on prices.

Helen Lau, an analyst at Argonaut Securities in Hong Kong, said Shanghai metals prices were all falling because of a lower-than-expected social financing figure in China amid an intensified crackdown on the country's shadow banking sector.

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"Markets are worried about whether there would be liquidity," Lau said.

China's total social financing (TSF), a broad measure of credit and liquidity in the economy, dropped sharply to 760.8 billion yuan ($118.80 billion) in May from 1.56 trillion yuan in April, central bank data showed on Tuesday.          

FUNDAMENTALS

SHFE ALUMINIUM: The most-traded August aluminium contract on the Shanghai Futures Exchange was down 1.2 percent at 14,720 yuan ($2,298.96) a tonne by the mid-session interval, having earlier touched 14,570 yuan, its lowest since May 2.

COPPER: Three-month copper on the London Metal Exchange fell 0.6 percent to $7,181 a tonne as of 0524 GMT, trading lower for a fourth straight session, while Shanghai copper shed 0.9 percent to 53,490 yuan a tonne.

OTHER METALS: Shanghai zinc slipped 1.1 percent, while nickel and lead lost around half a percent each. Only London nickel bucked the trend, edging up 0.2 percent.

DRC: Democratic Republic of Congo state miner Gécamines will drop legal proceedings to dissolve a copper and cobalt joint venture with a subsidiary of Glencore Plc after reaching a settlement with its partner that includes Gécamines getting a $150 million payment.

PERU: Southern Copper Corp said on Tuesday that it plans to start building its proposed $2.5 billion copper mine Michiquillay in Peru next year and will likely start operations in 2022 - three years earlier than previously forecast.

MARKETS NEWS   

Asian shares slipped back on Wednesday as investors looked to the Federal Reserve policy decision later in the day and any clues it might give on future rate hikes, shifting focus away from the historic U.S.-North Korea summit in Singapore.

© Reuters News 2018