Metals advance: Is China healthy?

August 12, 2014 07:36 AM

Zinc and nickel paced gains by industrial metals in London amid signs demand is improving in China, the biggest consumer. Aluminum rose to the highest since February 2013.

Industrial production in China maintained its pace of growth last month, economists surveyed by Bloomberg said before data due tomorrow. Zinc trading volumes in Shanghai were more than triple the average today, data compiled by Bloomberg show. Money managers’ long position in zinc came to 28% of the open interest as of Aug. 8, the most among six main metals traded on the London Metal Exchange, data from the bourse showed. Still, that’s down from 30% a week ago.

“Economic activity in China appears robust,” said Nic Brown, head of commodities research at Natixis SA. “Over the next couple of days we have more Chinese data, with the prospect for positive surprises in readings such as industrial production.”

Zinc for delivery in three months rose 1.5% to $2,339 a ton by 1:46 p.m. on the LME and nickel advanced 1.8% to $18,992 a ton. Aluminum added as much as 1.1% to $2,056 a ton. The three metals all climbed for a second day.

Factory output in China probably rose 9.2% from a year earlier, unchanged from June, while retail-sales growth accelerated to 12.5%, according to the economists.

Zinc inventories monitored by the Shanghai Futures Exchange fell 1.9% last week to 199,449 tons, the lowest since December 2009. Zinc stockpiles monitored by the LME, down 23% this year, climbed 1.3% to 715,650 tons, the highest since May, on inflows in New Orleans, data showed today.

Copper climbed 0.2% to $7,006.50 a ton in London. Futures for delivery in September gained 0.2% to $3.1805 a pound on the Comex in New York on volumes that were 6% higher than the 100-day average for the time of day.

In Shanghai, trading volumes for copper were 36% lower than the 100-day average, while aluminum trading was 36% higher.

Lead and tin gained on the LME.

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