LIVE FUTURES REPORT 17/10: LME copper consolidates break above $7,000/t

Traders said copper’s move on Monday – where prices hit their highest for just over three years – pointed to further gains for the metal.

“It is in good upside territory on the charts, but today is a case of locking in the move above $7,000. Overall, the metals are gearing up quite nicely now for this quarter,” a trader said.
The boost to sentiment this week has been due to fundamentals and China’s bullish economic outlook.

Increased optimism today stemmed from a better-than-expected print for China’s September producer price index (PPI) and expectations that the country’s third-quarter gross domestic product (GDP) reading is set to exceed previous estimates.

The Chinese PPI for September at 6.9% was up from 6.3% previously, also beating the previous forecast of 6.4%.

Chinese market participants’ growing optimism ahead of the forthcoming 13th Five-Year Plan meeting at the 19th Party Congress in Beijing is also playing a major role in higher prices.

“As long as prices don’t run ahead of the fundamentals, we could be in for an interesting LME Week [at the end of October]. People will be optimistic, and that could translate into business,” the trader said.

Copper move tempered by inventory increase 

• The three-month copper price, which rose as high as $7,177 per tonne yesterday to the best since July 25, 2014, was trading at $7,081 per tonne, still up $21 from the previous kerb close. 
• Intra-day upside enthusiasm was tempered by an increase in warehouse stocks, as inventories rose a net 6,300 tonnes to 291,325 tonnes.

Other base metals mixed 

• Elsewhere, other metals were mixed, with price moves largely routine – the market is likely to take its cue from copper. 
• The three-month aluminium price traded at $2,141 per tonne, up $5 from Monday. Stocks declined by 6,725 tonnes to 1,212,225 tonnes. 
• To some extent, weaker-than-expected winter cuts in China have also wavered the market’s bullish sentiment towards the light metal price in the short term. 
• On October 13, Binzhou city in the Chinese province of Shandong announced that it will halt a further 1.6 million tpy of aluminium capacity from November 15 to March 15. However, the amount scheduled to be cut was lower than market expectations.
• The three-month zinc price extended Monday’s falls, dropping $57 to $3,137 per tonne. Inventories dropped a modest 50 tonnes to 271,850 tonnes. 
• The three-month lead price eased $7 to $2,533 per tonne – stocks rose 175 tonnes to 152,150 tonnes. 
• The three-month nickel price was $140 lower at $11,725 per tonne. Stocks were down 132 tonnes at 385,656 tonnes. 
• The three-month tin price gained $75 at $20,675, with inventories falling 50 tonnes to 2,040 tonnes.

Currency moves and data releases 
 

• The US dollar index was up 0.16% at 93.46. 
• In other commodities, the Brent crude oil spot price rose 0.26% to $58.15 per barrel. 
• On the economic data side, there was a flurry of UK figures. Notably, the September CPI rose 3.0% as expected, while producer prices increased 0.2%. The eurozone CPI was up 1.5%, while the ZEW economic sentiment index was 26.7, down from forecasts and the previous reading. 
• Later today, there is a host of US data including import prices, capacity utilisation rate, industrial production, and the NAHB housing market index. 
• In addition, Bank of England governor Mark Carney and US Federal Open Market Committee member Patrick Harker are speaking.