LIVE FUTURES 13/10: LME copper, nickel continue rally; base metals stronger

Copper has seen sustained buying after Chinese investors returned from Golden Week (2-8 October), and has been supported by Chinese market participants’ growing optimism ahead of the upcoming 13th Five-Year Plan meeting at the 19th Party Congress in Beijing next week.

“Copper and nickel had room on the upside and prices are climbing accordingly, while the base metals in or near high ground are having to absorb selling, which is keeping prices range-bound, albeit in high ground,” Metal Bulletin senior analyst William Adams said.

“They remain well placed to extend higher and a rebound in China’s iron ore and steel prices, combined with a good Chinese trade day, may well be the catalysts,” he added.

Nickel prices climbed a further 1.9% this morning while an ongoing curb in Chinese output continues to support prices, while demand from steel producers remains strong.

The complex was also supported by a weaker dollar, which fell after less-hawkish-than-expected comments came from the Federal Open Market Committee (FOMC) minutes on Wednesday.

Zinc prices also remained strong, with 17,030 tonnes of metal cancelled in New Orleans this morning, spreads remaining in high backwardation and the cash/three-months currently at $86.50 per tonne.

Copper edges higher

• The three-month copper price climbed $18 to $6,905 per tonne. 
• Stocks declined a net 2,100 tonnes to 283,800 tonnes, with 1,200 tonnes freshly cancelled.
• Rio Tinto Kennecott has suspended operations at its smelter in Utah, USA, after an employee died from sulfur-dioxide exposure on-site during the early hours of October 8, the company said on October 11. The company did not disclose when operations might resume or how much copper output might be lost during the stoppage.
• “[Copper] has had its reaction to the August gains, built a base and looks good for another test of the resistance [overhead],” a trader said.
• “Copper is really looking to have a go at the psychological $7,000 [on the LME] level now,” another trader said.
• The global refined copper market recorded a deficit of 70,000 tonnes in June, pushing the supply/demand balance to a deficit of 75,500 tonnes between January and June 2017, the International Copper Study Group estimates.
• The cash/three-month spread is currently at $25.75 per tonne contango, tightening from over $40c yesterday. 

Base metals prices

• The three-month aluminium price was up $21.50 to $2,167.50 per tonne. Stocks declined a net 1,000 tonnes to 1,229,750 tonnes.
• Nickel’s three-month price climbed $225 to $11,620 per tonne. Stocks declined 258 tonnes to 385,575 tonnes with 3,540 tonne freshly cancelled. Nearby spreads are now in backwardation, with cash/October at $2 per tonne. 
• The three-month zinc price was up $25 to $3,275 per tonne. Inventories increased 4,300 tonnes to 270,925 tonnes with 17,050 freshly cancelled. 
• Lead’s three-month price increased $5.50 to $2,562.50 per tonne. Stocks dipped 550 tonnes to 152,075 tonnes.
• The three-month tin price increased $40 to $20,780 per tonne. Inventories increased 45 tonnes to 2,090 tonnes. The nearby cash/October spread has moved into $4 per tonne contango. 

Currency moves and data release

• The dollar index was most recently down 0.05% to 93.03.
• In other commodities, the Brent crude oil spot price was up 1.46% to $57.22 per barrel.
• Data out today includes US September consumer price index and retail sales numbers and the results of the preliminary University of Michigan Consumer Sentiment Survey for October.
• In addition, FOMC members Robert Kaplan and Charles Evans are speaking later today.