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By Siyi Liu and Dominique Patton
BEIJING, Aug 19 (Reuters) – Shanghai base metals were set to post weekly losses on Friday, as subdued demand, a stronger dollar and prospects of more U.S. interest rate hikes outweighed support from lower supplies.
Nickel led the losses in base metals, with its most-traded September contract on the Shanghai Futures Exchange SNIcv1 down 5.8% at 171,050 yuan ($25,114.52) a tonne, as of 0416 GMT, after a four-week rally.
ShFE zinc SZNcv1 and aluminium SAFc1 have lost 0.7% and 2.3% so far this week to 25,040 yuan and 18,545 yuan a tonne, respectively, despite rallying at the start of the week on further production cuts by European smelters.
Power controls in China’s southwestern Sichuan province and Chongqing have affected production of lithium, aluminium and zinc, raising concerns about supply.
Meanwhile, muted downstream industrial activities could also weaken demand of metals. Market participants were waiting to see if Sichuan would extend its power controls over the weekend and power shortage would become a broader issue in the world’s biggest metal producer and consumer.
Several provinces including Anhui, Zhejiang and Jiangsu have curbed industrial production to prioritise residential power usage but the impacts on metals production have been limited for now.
Despite production headwinds, weak demand dominated the market this week amid macro-economy pressures and prospects of more Fed rate hikes, said Xia Cong, an analyst at state-backed research house Antaike.
Fed minutes showed officials were determined to curb rising prices by increasing interest rates, pushing the dollar to a one-month high.
ShFE copper SCFcv1 has slipped 0.4% this week to 62,500 yuan a tonne, while lead SPBcv1 has slid 2.1% to 14,980 yuan a tonne.
Three-month copper on the London Metal Exchange CMCU3 was up 0.2% at $8,050.50 a tonne on Friday. LME zinc CMZN3 was up 0.5% at $3,488.50 a tonne, aluminium CMAL3 gained 0.2% to $2,408.50 a tonne, lead CMPB3 climbed 0.3% to $2,078.50.
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($1 = 6.8108 Chinese yuan)
(Reporting by Siyi Liu and Dominique Patton; Editing by Subhranshu Sahu)
((Siyi.Liu@thomsonreuters.com;))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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