Base Metals Gain Amid China Restrictions

By Marina Force Features Dow Jones Newswires

Copper prices jumped Wednesday, along with the other base metals, as restrictions on Chinese refiners bolstered the market.

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Copper for September delivery was recently up 2% at $2.9400 a pound on the Comex division of the New York Mercantile Exchange, on track to close at a one-week high.

China's cuts to its refining capacity amid a pollution crackdown are pushing the base metal complex up, said Ole Hansen, commodity strategist at Saxo Bank.

The monthslong rally in steel prices is also spilling over markets for steel making raw materials, Mr. Hansen added. Zinc, used for galvanizing steel, hit a decade-high Wednesday. The London Metal Exchange's three-month contract rose 4.2% to $3,087.00 a ton.

China Hongqiao, the world's biggest aluminum producer, confirmed on Monday it had closed 2.68 million tons of smelting capacity, equivalent to 4.5% of global output last year.

"The closed capacities are to be replaced by new capacities, and the company claims that production remains unaffected," Commerzbank said in a morning note. However, "the news still appears to be regarded as a good reason to buy," it said.

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As base metals climbed, investors were debating how far the rally had to run. "It looks limited, especially for copper which has been receiving some selling the last few days on profit-taking after quite a strong buildup," Mr. Hansen said.

Gold for December delivery fell 0.3% to $1,275.50 a troy ounce in New York, as investors awaited minutes from the U.S. Federal Reserve's latest meeting Wednesday.

Adding to gold's headwinds were better-than-expected U.S. retail sales data, which fueled confidence in the country's economy. A stronger dollar has pushed the precious metal lower recently as well, making dollar-denominated metals more expensive for other currency holders. The WSJ Dollar Index was recently up 0.1% at 86.76.

Stephanie Yang contributed to this article

Write to Marina Force at

(END) Dow Jones Newswires

August 16, 2017 10:00 ET (14:00 GMT)