LIVE FUTURES REPORT: LME copper prices higher; Al weakens on underwhelming production cuts

Base metal prices on the London Metal Exchange were broadly lower or unchanged this morning, Tuesday November 21, with copper bucking the trend.

The three-month copper price is being buoyed by expectations of possible supply disruptions and news that the global refined copper market remains in deficit.

Lead and zinc remained little changed this morning as both metals remain directionless.

Aluminium led the downward trend as the market remains underwhelmed by capacity cuts set to take place in China over winter.

The cuts are no longer expected to be as high as previously thought and the three-month price is currently correcting lower.

“Aluminium prices fell after reports that the production curbs over winter will not be as great as expected. Of the 1.3mtpy of capacity that China Hongqiao Group has been asked to close, nearly 400ktpy is not operational, according to industry experts,” ANZ Research said on Tuesday.

“The same company also said it would increase utilization rates at operational units to offset some of these closures,” the bank added.

The three-month nickel and tin prices both followed lower as a stronger dollar is capping the upside of prices.

“Base metals are likely to come under further downward pressure in the coming days as momentum-based sellers are in charge of the trend in the immediate term,” William Adams, Metal Bulletin senior analyst, said.

“But when prices become attractive, we expect some speculative/physical buying on the dips. At this juncture, aluminium appears to be the weakest, as Monday’s rise in open interest alongside lower prices suggests that bears are back and intend to push prices lower,” he added.

Copper higher 

  • The three-month copper price was up $25.50 to $6,853.50 per tonne.
  • Stocks declined 7,025 tonnes to 234,475 tonnes, with 1,550 tonnes freshly cancelled.
  • The price is being buoyed by expectations of possible supply disruptions due to upcoming industrial action at Peruvian copper mines over the next few days.
  • Marex Spectron reported yesterday that Southern Copper Corp was set to strike from midnight today while workers at Peru’s Mining Federation are also set to meet this week with strikers threatened.
  • Southern Copper produced around 870,000 tonnes of copper in 2016, according to ANZ Research.
  • The red metal’s price is also being boosted by news that the global refined copper market remained in a deficit throughout August, according to the International Copper Study Group (ICSG).
  • The global refined copper market recorded a 50,000-tonne deficit through August, primarily due to weak supply growth from major producer nations such as Chile, the ICSG reported on Monday.
  • Global refined production was flat year on year, with primary production falling 1.5% but scrap output climbing 10%.
  • “Copper should be in the best posture to take advantage of a continued rise in global risk appetite in so far as the red metal tends to attract the most of reflation-oriented trades,” Adams said.

Base metal

  • Aluminium’s three-month price was down $11 to $2,075 per tonne. Inventories fell 9,175 tonnes to 1,141,700 tonnes, with 2,875 tonnes freshly cancelled.
  • The three-month nickel price dipped $10 to $11,645 per tonne. Stocks dipped 612 tonnes to 379,278 tonnes, with 2,568 tonnes freshly cancelled.
  • Zinc’s three-month price was unchanged at $3,163 per tonne. Inventories dropped 1,225 tonnes to 224,025 tonnes.
  • The three-month lead edged up $3 to $2,463 per tonne. Stocks were up 1,075 tonnes to 146,875 tonnes.
  • Tin’s three-month price was most recently at $19,450 per tonne, a decline of $25. Stocks dipped 10 tonnes to 2,210 tonnes.

Currency moves and data release

  • The dollar index was most recently flat at 94.04.
  • In other commodities, the Brent crude oil spot price was up 0.94% to $62.56 per barrel.
  • The economic agenda is light today with mainly the United Kingdom’s public sector net borrowing, the Bank of England’s inflation report hearings and US existing home sales of note.