Copper continues its upward trend, nickel is slowing down

According to the official Purchasing Managers' Index for China's manufacturing sector (PMI), Caixin's PMI also turned out better than expected in June. As a result, sentiment is brightening in China's smaller and private industrial companies and the economic recovery appears to be broad-based. The ISM index in the U.S., which will be released today, is likely to show that industrial sentiment has improved there as well. In addition, according to media reports, the Chinese central bank is about to cut interest rates for lending and rediscounting in order to reduce the cost of borrowing for smaller companies. Market participants are taking this as an opportunity to continue buying metals, thereby driving their prices higher. In the case of copper, this may also be technical follow up buying after the price breached the $6,000 per tonne mark yesterday. This morning it is already trading at just under $6,100, its highest level since the end of January. The fact that copper production in Chile, the world's largest copper mine producer, was also expanded in May despite the coronavirus, is irrelevant. According to data from the National Statistics Institute, it rose by 0.7% year-on-year to 496 thousand tonnes. In the first five months of the year, copper production in Chile was significantly higher than in the previous year. This means that the mines operated at almost full capacity.

Nickel only followed the sharp rise in the price of copper to a lesser extent. In recent weeks several attempts to break through the USD 13,000 per tonne mark failed. According to data from the International Nickel Study Group, the global nickel market was clearly in surplus supply in the first four months of the year (53.9 thousand tonnes). At the same time last year there was still a deficit. In contrast to copper, market participants seem to be taking a more realistic view of the situation for nickel.

Source: Commerzbank Research, Photo: Fotolia