Copper, Nickel Rebound as China Intervenes in Stock Market

  • Mining equities rise; Freeport gains as much as 2.4%
  • Metals tumbled Monday as stock rout added to demand concerns

Copper climbed the most in two weeks and nickel gained after China sought to support its stock market following Monday’s rout that sent metal prices tumbling.

State-controlled funds in China bought equities and regulators signaled a selling ban on major investors will remain beyond this week’s expiration date, according to people familiar with the matter. Most metals traded in London and a gauge of mining shares rose.

On Monday, copper fell the most in three weeks, helping take an index of six main contracts on the London Metal Exchange to its biggest slump since September after a plunge in mainland China shares triggered a trading halt. Slowing economic growth in the Asian country, the biggest commodities buyer, has curbed demand for metals and sent prices to near the lowest in six years. That’s prompted Chinese refiners and some of the world’s top miners to pledge output cuts to reduce a glut of material.

“Metals are getting a Chinese intervention shot in the arm, but the markets are still having trouble finding their feet,” Michael Turek, the head of base metals at BGC Partners Inc. in New York, said in a note. “Understandably, one has focused mainly on the supply side to provide the quick fix to mounting surpluses, but demand is gradually moving into sharper focus as potentially a longer term and more permanent panacea.”

Metals Prices

Copper for delivery in three months climbed as much as 1.5 percent, the most since Dec. 18, and settled at $4,645 a metric ton at 6:23 p.m. on the LME. Stockpiles of the metal held in warehouses tracked by the exchange fell for a fourth day.

Nickel prices rose 0.2 percent to $8,525 a ton in London. Zinc gained, while aluminum, lead and tin declined on the LME. Copper futures on the Comex rose.

Slumping prices have hurt producers, including those in Indonesia, which before a 2014 export ban was the world’s biggest shipper of mined nickel. The country may relax rules on the export of metal concentrates following the collapse in metals prices, while keeping a ban on raw ore shipments, a minister official told Bloomberg.

The Bloomberg World Mining Index rebounded on Tuesday, with shares of Freeport-McMoRan Inc. climbing as much as 2.4 percent. The 80-member gauge of producers on Monday tumbled by the most in almost four weeks.

"Chinese stock markets have stabilized, thanks largely to government intervention, which has clearly helped sentiment in the metals space," David Wilson, an analyst at Citigroup Inc. in London, said by e-mail.

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