Base metals rise

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BEIJING- Most base metals rose on Tuesday, as an energy crisis in Europe and China stoked supply worries, but gains were capped by concerns over global economic weakness and interest rate hikes.

A number of regions in China recently implemented power rationing to industrial users to ensure residential power supply amid heat wave.

An estimated 500,000 ton per year zinc capacity has been shuttered due to power controls in the world’s top metals producer and consumer, consultancy CRU Group said on Friday.

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The most-traded September zinc contract on the Shanghai Futures Exchange rose 2.3 percent at 25,485 yuan ($3,720.82) a ton.

In Europe, smelters are grappling with sky-high energy costs. Last week, Belgian smelter Nyrstar said it would put its zinc smelting operations at Budel in the Netherlands on care and maintenance from Sept. 1. The company has already cut output by up to 50 percent at its three European zinc smelters.

But the short-term optimism driven by China’s power curbs will fade as weather cools down, a zinc and lead trader said.

“Macro weakness still overhang on the market, with global recession fears and likely further Fed’s rate hikes adding downside risks to prices.”

The US dollar has found support in recent sessions as several Federal Reserve officials reiterated an aggressive monetary tightening stance ahead of the Fed’s Jackson Hole, Wyoming, symposium this week.

A strong dollar typically places downward pressure on commodity prices as it becomes more expensive for non-US holders to buy. – Reuters

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