Metals – China boosts its gold purchases
Prices of most industrial metals traded higher yesterday, supported by optimism across risk assets along with a declining dollar. LME nickel 3M prices rose over 10% DoD to their highest level in seven months yesterday, leading the gains amongst base metals. The metals complex also benefited from China’s decision to ease its Covid restrictions further across major cities, brightening the outlook for metals consumption in the country.
Indonesia is weighing resuming nickel ore exports, according to a report from Kompas newspaper, citing an official at the Fiscal Policy Agency at the Finance Ministry. The Indonesian government is considering a number of options, including imposing taxes on exports of nickel ore, while it appeals the WTO ruling against Indonesia for banning nickel ore exports, the official was quoted as saying. Indonesia banned exports of nickel ore in 2014, relaxed the ban in 2017, and reimposed it for good in January 2020 in a bid to attract foreign investment and to grow a domestic processing industry to produce downstream materials and products in the nickel and EV battery supply chain.
A major global aluminium producer offered Japanese buyers a premium of $95/t for the coming quarter. This is the lowest level in more than two years, according to a report from Bloomberg, amid weak demand, particularly from the auto sector and concerns over the economic impact of US monetary tightening.
The latest update from Vale SA shows that the company is estimating lower-than-expected iron ore production guidance for next year while also lowering its longer-term outlook. The company plans to stay below pre-disaster levels for the foreseeable future, as part of a shift toward higher-quality ore and value-added production. Vale is targeting output guidance of 310-320mt of iron ore for 2023, below market expectations of 325mt.
In precious metals, China reported an increase in its gold reserves for the first time in more than three years. The People’s Bank of China raised its holdings by 32 tonnes in November from the month before, bringing its total to 1,980 tonnes as the country plans to further diversify away from the US dollar. Official gold holdings in China as part of total forex reserves are still at very low levels, which gives more room for further gold purchases over the coming months.
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