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Benchmark London metal prices rose on Wednesday, with aluminium rebounding after a near 5% drop in the previous session, as traders tempered their optimism about Russia-Ukraine talks.
The U.S. dollar softened, making greenback-priced metals less expensive for holders of other currencies, though worries about demand in top metals consumer China due to a COVID-19 surge kept gains in check.
Three-month aluminium on the London Metal Exchange CMAL3 was up 1.9% at $3,501 a tonne by 0705 GMT, following a 4.9% slump on Tuesday after Russia’s promise to scale down its military operations around Kyiv eased supply concerns.
Ukraine reacted with scepticism to Russia’s promise, as some Western countries expected Moscow to intensify its offensive in other parts of the country.
“Aluminium saw some of its risk premium evaporate after reports that Moscow would reduce military operations near Kyiv. Any de-escalation could help ease the nervousness around increasing supply disruptions,” ING commodity strategists said in a note.
“However, it remains to be seen if and when those existing sanctions will be lifted.”
Russia, a major producer of aluminium, nickel and copper, has been hit with sanctions by Western nations, sparking concerns over supply.
The benchmark aluminium contract on the Shanghai Futures Exchange SAFcv1 ended daytime trade 0.4% lower at 22,935 yuan ($3,609.25) a tonne.
* LME copper CMCU3 rose 1.6% to $10,477.50 a tonne, while the most-traded Shanghai May copper contract SCFcv1 gained 0.9% to 74,210 yuan a tonne.
* China’s top copper smelters set their floor treatment and refining charges for copper concentrate in the second quarter of 2022 at $80 per tonne and eight cents per pound, two sources with knowledge of the matter said.
* LME zinc CMZN3 climbed 1.8% to $4,099.50 a tonne, lead CMPB3 rose 0.6% to $2,394.50 a tonne, and tin CMSN3 added 0.3% to $42,545 a tonne. LME nickel CMNI rose as much as 4.2% to $33,130 a tonne.
* Shanghai zinc SZNcv1 advanced 1% to 26,775 yuan a tonne, nickel SNIcv1 jumped 3.3% to 223,440 yuan a tonne, lead SPBcv1 rose 0.8% to 15,705 yuan a tonne, but tin SSNcv1 was virtually flat at 346,400 yuan a tonne.
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