Commodities: Industrial metals buoyed by report of possible Chinese stockpiling

Industrial and precious metals' prices performed best on Wednesday, amid reports of possible Chinese stockpiling plans and on-going jitters across financial markets.

Prices for the main bulk metals found a bid, with three-month LME-traded copper futures rising by 2.5% to $4,630 per metric tonne, three-month zinc advancing 0.9% to $2,042.00 per metric tonne and three-month nickel by 1.8% to $9,000 per metric tonne.

Contributing to the positive sentiment, data published overnight in China revealed stable lending dynamics across the country in May, although the figures also pointed towards a peaking credit cycle, according to some economists.

Given recent improved data and officials in Beijing's renewed focus on structural reforms means further monetary policy easing is "off the table for now", according to Julian Evans-Pritchard at Capital Economics.

Chinese banks extended a net 986bn yuan in new loans in May (consensus: 750bn yuan).

"This means that the acceleration in credit growth is likely to start to reverse before long, probably as soon as Q3, which could prove to be a major headwind to growth next year."

To take note of as well, Bloomberg cited "two persons with knowledge of the matter" according to whom China is planning to increase its stockpiles of base metals via both state and commercial reserves, although no precise timeline was forthcoming.

Commenting on recent trends in base metals, CTS International, a unit of UniCredit Bank said: "The trends in the base metals are quite mixed at present. Copper prices have broken lower and are struggling. Zinc is forging ahead as the market seems to be embracing its supply-driven bull story now.

"Aluminium has a few major cross-currents in the sense that its fundamentals are weak, but the vast stock overhang – the main bearish aspect – is ring-fenced from the market as it is mostly being financed off-exchange, so is not directly part of the supply equation for now. The same may be true for nickel, which performed strongly last week even though total stocks in relative terms far exceed those of aluminium."

Precious metals were still in (safe-haven) demand in the run-up to the Brexit referendum, with August 2016 COMEX-traded gold futures riisng by 0.68% to $1,296.80/oz..

July 2016 COMEX silver gained 0.78% to $208.75/lb..

Energy futures were all lower by closing bell on Wall Street, with market commentary highlighting how recovering exports from Canada were more than offsetting data showing tighter oil product stockpiles in the States.

West Texas Intermediate crude oil futures for delivery in July 2016 fell by 2.08% to $47.48 per barrel in NYMEX trading.

In agricultural commodities, it was a mixed session, with September 2016 ICE-traded cocoa futures edging higher by 0.39% to $3,116.00 per metric tonne, alongside a gain of 1.7% to $535.1 per metric tonne for white sugar futures on Euronext LIFFE.

The Bloomberg Commodity index finished 0.34% lower at 88.47 while the US dollar sport index, despite the similar-sized 0.27% fall observed in the US dollar spot index.