LME copper price steady; stock tug-of-war continues

Base metal prices on the London Metal Exchange were steady with a downside bias during trading on the morning of Wednesday 8 March, moving off yesterday’s lows but struggling against a backdrop of weaker Chinese data.

China’s trade balance deficit was a larger than expected 60 billion yuan while its dollar-denominated trade balance was also larger than forecast at $9.1 billion. 

Copper stocks hit two-month high 

  • The three-month copper price was $9 higher at $5,782 per tonne, recovering slightly from Tuesday’s one-month lows.
  • The battle for control of copper restarted in earnest this week when the trend shifted from stock removals to stocks arrivals.
  • Stocks rose another net 26,550 tonnes to 288,525 tonnes today, their highest since January 10. More than 91,000 tonnes have arrived so far this week, the bulk into listed warehouses in Asia.
  • But there was another jump in cancelled warrants today of 15,600 tonnes, lifting the total to 123,500 tonnes – 16,650 tonnes were freshly cancelled in Busan.
  • “There were rumours circulating that the sudden influx of LME stock was a result of a major merchant delivering metal to pressurise the price so that they could get back an LME futures short position – a plausible argument that may well turn out to be the truth,” Malcolm Freeman at Kingdom Futures said.
  • The market is now focused on possible deliveries from China in the current low-premium environment.
  • China’s imports of unwrought copper and copper-fabricated products hit a six-month low in February amid a closed arbitrage window and fewer working days during the period.
  • The country imported 340,000 tonnes of unwrought copper and copper-fabricated products in February, down 10.5% month-on-month and 19% year-on-year.
  • Still, China imported 1.43 million tonnes of copper ore and concentrate in February, compared with 1.25 million tonnes in January.

Nickel stocks at highest since June 2016

  • Nickel remains under pressure – the three-month price fell $85 to $10,560 per tonne. Sentiment soured on news that the Philippines may reassess its mining audit, which had resulted in several mine closures.
  • Meanwhile, in Indonesia, reports that the potential ban on raw material exports may not come to pass provided further downward pressure.
  • “Miners with smelters or those that cooperate with smelter owners will be allowed to ship as much nickel ore and bauxite as the input capacity of the smelters,” Marex Spectron noted.
  • As well, stocks rose 5,022 tonnes to 386,118 tonnes, their highest since June 2016.
  • The aluminium price is holding firm, climbing $6 to $1,876 per tonne, basis three months.
  • Stocks fell 16,325 tonnes to 2,101,550 tonnes but there were 16,025 tonnes of cancellations.
  • The three-month zinc price edged $3 lower to $2,693 per tonne although stocks fell 2,175 tonnes to 383,850 tonnes. Three-month lead was also down $3 at $2,231 per tonne, with no change in stocks.
  • The three-month tin price slipped $25 lower to $19,350 per tonne; stocks fell another 290 tonnes to 5,030 tonnes.

Data and currency moves 

  • In currencies, the dollar index was steady at 101.96, up 0.14%.
  • Later today the USA will release its ADP non-farm employment change alongside revised non-farm productivity and revised labour costs.