Base metals rallied on Friday, boosted by a surge in Asian and US equity markets and news of further output cuts, but oil remained under pressure amid a gloomy outlook for global demand.
Copper led base metals prices higher, climbing 2 per cent to $3,790 a tonne, having earlier touched a high of $3,850 a tonne. A last-minute stock market surge on Wall Street on Thursday and solid gains in Asia overnight helped lift sentiment.
Output cuts helped prop up base metals prices, as producers responded to falling prices by delaying or cancelling production. Xstrata said it would shut down two of its Canadian nickel mines ahead of schedule, due to the weaker price environment, leading to an annual output loss of 8,200 tonnes.
Nickel climbed 2.7 per cent to $11,600 a tonne. The metal has regained almost a third of its value since touching a five year low of $8,850 a tonne on October 24, but remains 67 per cent down from its high in March this year.
Nickel also benefited from China’s announcement on Friday that it would scrap export taxes for cold-rolled, galvanised steel, in order to encourage trade in the metal. China is the world’s largest steel producer, but the industry has been hit hard by the global crisis, due to a slump in demand from the construction and automobile sectors.
The Chinese ministry of finance said it would also remove export taxes for hot-rolled steel, section steel and steel rods and wires in hopes of boosting demand.
Meanwhile the Canada-based producer Lundin suspended zinc production at its Neves-Corvo mine in Portugal, and put its Aljustrel zinc mine onto care and maintenance. Lundin president Phil Wright said: ”At Neves-Corvo, it does not make economic sense to produce zinc at these prices.”
Zinc rose for a fourth consecutive session, up 1.3 per cent at $1,228 per tonne. Prices have dropped 58 per cent since their peak in March.
Oil drifted lower, having staged a rebound late on Thursday in response to Wall Street’s equity rally.
Nymex December West Texas Intermediate crude oil shed 47 cents to $57.77 a barrel, after ending trading in New York at $58.24, while ICE January Brent lost 59 cents to $55.65 a barrel, as recessionary fears resurfaced.
Gold suffered from a stronger dollar, sliding 1.1 per cent to $728.4 a troy ounce, moving between a low of $724.60 and a high of $736. The precious metal closed at $736.55 in New York on Thursday.
