Chinese aluminum, nickel producers ask state to buy up surplus metal

A lower U.S. currency makes USA dollar-denominated commodities cheaper for non-US firms, a relationship used by funds to trade. Aluminium and lead joined the rally after those metals also had touched their lowest in more than six years on Monday and nickel skidded to its weakest since 2003. Dollar Index breach the psychologically important 100 mark for the second time this week against a basket of its main peers on interest rate hike expectations.

A gauge of industrial metals is near the lowest in six years as a slowdown in China, the world’s biggest user, cut demand and added to oversupplies.

In signs of the weakening buying power in major consumer markets, the euro extended its losses and hit a seven-month low against the dollar, while China’s onshore yuan opened at its weakest since August following a lower official mid-point fix. Shanghai aluminium rose 3.1 percent to 10,125 yuan a tonne and LME aluminium gained 1.6 percent to $1,484 per tonne.

“The U.S. dollar has been the principal driver [of prices this morning], ” said John Meyer, an analyst at broker SP Angel. Earlier in the session it rose to $9,330, its highest since November 17. Three-month zinc was up 2.5 percent at $1,617 a tonne, below an earlier two-week high at $1,639. Nickel fell to $8,235 a ton, while zinc erased the advance posted on Friday after Chinese smelters announced they planned to cut production next year.

HONG KONG China’s aluminum and nickel producers have asked Beijing to buy up surplus metal, sources said, the first coordinated effort since 2009 to revive prices suffering their worst rout since the global financial crisis.

Chile’s Codelco, the world’s largest copper producer, said in Shanghai last week it would rather rein in costs than output and Antofagasta Minerals SA said global mining companies had already cut enough production to balance the market and support prices at levels now. “Doing these things will only prolong the pain of too much supply being on the market”.