Nickel prices led a broad rally for industrial metals on Friday as steel prices in China rose on the back of continuing production curbs.
On the London Metal Exchange, nickel – a key component in steel production – rose 2.8% to $12,097 a metric tonne by mid morning in London.
China output curbs
China has ordered production curbs from its steel producers to cut the impact of pollution in its biggest cities during the winter, but some smelters have been ordered to cut output in October, a month ahead of the scheduled start.
China's steel output fell 3.7% in September after hitting a record high in August, and further falls are seen in October as the curbs begin to hit.
Steel prices rise
Iron ore futures prices rose sharply on Friday. Reuters reported that the most active iron ore contract on the Dalian Commodity Exchange closed 5.4% higher at Rmb469 ($71) a tonne after falling 3.4% on Thursday.
Meanwhile, coking coal, another key steelmaking ingredient, climbed 2.9% to Rmb1,152.50 a tonne. The most traded rebar steel contract closed 4.3% higher at Rmb3,776 a tonne.
"Chinese crude steel output has dropped 4% month-on-month to 71.8mt in September 2017, and with winter cuts taking place, output could remain under pressure over the fourth quarter as well," said Hamza Khan, head of commodities strategy at ING.
Thanks to nickel's near 3% rise, most of the other industrial metals were higher.
Copper rose 0.9% to $7,030 a tonne, lead gained 2.2% to $2,531 a tonne, zinc added 1.4% to $3,158 a tonne and aluminium rose 0.7% to $2,163.
The only base metal faller on the LME in morning trade was tin, down 0.5% at $19,930 a tonne.