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By the close of Friday's daytime trading session, the most-traded May nickel futures contract had fallen by 3.1 per cent from a week earlier to RMB 137,140 per tonne (USD 19,883 per tonne), the most-traded April copper contract declined by 2.8 per cent on the week to RMB 101,050 per tonne. In contrast, the most-traded May aluminium contract had climbed by 3.6 per cent from the previous week to RMB 24,785 per tonne.
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Nickel and copper futures came under pressure as the U.S. dollar strengthened this week. Rising oil prices following the escalation of Middle East tensions last weekend heightened concerns about inflation, lowering the possibility of near-term interest-rate cuts by the U.S. Federal Reserve. This provided support for a stronger dollar, according to market analysts. On March 5, the U.S. Dollar Index rose by 1.53 points from February 26 to 99.32, weighing on futures prices of non-ferrous metals such as nickel and copper.
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On the other hand, aluminium futures gained support from concerns over potential supply disruptions during the same week. The escalating regional tensions have intensified market anticipation of a possible global primary aluminium shortage. As the Middle East region accounts for around 9 per cent of the world's primary aluminium capacity, interrupted production or shipments through the Strait of Hormuz could tighten global supply, analysts said. A potential supply deficit and stronger import demand in the global primary aluminium market pushed SHFE aluminium futures higher.
Meanwhile, inventories of the three metals in SHFE-registered and bonded warehouses continued to rise during the week. As of March 6, aluminium and copper stocks had climbed by 10.8 per cent and 8.6 per cent respectively from February 27, standing at 394,498 tonnes and 425,145 tonnes. Nickel inventories also increased, though at a slower pace, up by 1.6 per cent on the week to 61,769 tonnes.
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