Base metals prices push higher; deliveries made against ali back

LME base metals remained marginally higher on the morning of Thursday January 5 thanks to a temporary halt in the dollar’s recent advances and fund activity towards the end of European trading hours on Wednesday.

The three-month copper price recently traded at $5,649 per tonne, an increase of $15 on Wednesday’s closing level.

The dollar index was around 102.10 following the release of dovish minutes from December’s FOMC meeting. The index hit a 14 year high on Tuesday.

The euro, which had traded at 14-year lows around 1.0340 against the dollar earlier this year, was recently at a stronger 1.0509.

Although the Federal Reserve said that the pace of rate increases would be “gradual”, several Fed officials highlighted several risks that could “call for a different path of policy than the currently expected”, the minutes read.

Data from China also helped to underpin the more positive sentiment. The country’s Caixin services PMI was a better-than-expected 53.4.

Funds came to the market in yesterday afternoon’s trading session, propelling copper and nickel prices higher, market participants noted – they closed up 2.6% and 3.1% respectively.

Copper market hit by supply disruptions

  • Operations at Konkola Copper Mines (KCM)’s underground mine in Zambia have been suspended following a strike over pay. Zambia is the second-largest copper producer in Africa; KCM accounts for more than 30% of domestic output. 
  • LME inventories fell a net 4,100 tonnes to 301,775 tonnes – stocks have now fallen for 10 consecutive days – and cancelled warrants were down 6,850 tonnes at 102,125 tonnes.

Aluminium fails to hold at $1,700/t; rest of complex steady 

  • The three-month aluminium price was below $1,700, having briefly peaked at $1,700.50 earlier. It recently traded at $1,697 per tonne, up $12. 
  • “The question is who has got over short and will the market make a huge run back up into the $1,700s after so long in the doldrums?” Kingdom Futures Malcolm Freeman said. 
  • Aluminium spreads remain at double-digit backwardations throughout the first quarter. Any potential for nearby spreads to return to contango were thwarted by a 45,000-tonne cancellation in Asia at the end of last year. Cash-3s was at $10 backwardation and cash-Jan at $6.
  • Deliveries against the backwardation continue. Stocks were up 25,975 tonnes – 16,525 tonnes were delivered into Johor, 8,550 tonnes into Singapore and 3,150 tonnes into Port Klang. Cancelled warrants fell 4,400 tonnes to 668,350 tonnes, including 2,150 tonnes rewarranted into Busan. 

Nickel continues to rise; zinc and lead little changed

  • The three-month nickel price at $10,290 per tonne was up $70. Stocks fell 804 tonnes to 370,920 tonnes and cancelled warrants dropped 1,428 tonnes to 126,882 tonnes.
  • Sentiment remains fairly positive around nickel although there are concerns that the upside may be limited due to a large inventory overhang and slower Chinese demand growth.
  • The three-month zinc price climbed $15 to $2,636 per tonne. Cancelled warrants were up 4,475 tonnes, including 4,300 tonnes in New Orleans. Totalled cancelled material is now up to 105,225 tonnes.
  • More than 20,000 tonnes have been cancelled in the US port over the last two weeks, continuing a trend that has been in place since late last year.
  • The three-month lead price was unchanged at $2,079 per tonne as was the three-month tin price at $21,150 per tonne. Stock movements in both metals were negligible.
  • Steel billet, molybdenum and cobalt were neglected.

Today’s data releases

  • In data, the EU retail PMI for December at 50.4 was an improvement from the previous month’s reading of 48.6. The PPI at 0.3% beat the expected 0.2%. 
  • The ADP-non-farm employment change number, the precursor to Friday’s non-farm payroll report, is due later today, as are weekly unemployment claims, the ISM non-manufacturing PMI as well as crude oil and natural gas inventories. 
  • China’s Central Bank on Thursday set the middle rate of yuan against the dollar at 6.9307 compared with Wednesday’s 6.9526. 
  • Total US vehicle sales at 18.4 million were the highest figure since 2005. 

(Editing by Mark Shaw)