LME metals prices mostly nudge higher; markets cautious

Base metals largely inched higher during London Metal Exchange premarket trading on Monday January 9 although a cautious tone was evident, traders said.

“It is a bit of a ‘wait-and-see’ market. The stock markets are holding up but apart from that there is not a lot to get excited about so far. Copper is not doing an awful lot and is stuck around $5,600 for now,” one said.

Investors are reluctant to take positions ahead of the forthcoming inauguration of US president-elect Donald Trump on January 20 to see what policies he will implement once in office.

“We expect markets to move into consolidation mode ahead of the inauguration. We expect underlying sentiment to remain mildly bullish for the base metals unless the new US administration starts off by creating shockwaves,” analyst William Adams of Metal Bulletin said. 

Shortly after this, Chinese New Year starts on January 28. Many Asian participants will be absent – metals markets are likely to see a notable thinning of liquidity in this period. 

The three-month copper price recently traded at $5,594 per tonne, up $4 on Friday’s close, with volumes on Select routine at just above 2,700 contracts.

In spreads, the benchmark cash/3-months was at a relaxed contango of $20.50 – the recent tightness has eased, with a dominant holder reducing its position. In inventory data, stocks fell a net 225 tonnes to 294,900 tonnes.

Aluminium backwardations sustained 

  • The three-month aluminium price recently traded at $1,711 per tonne, down just $1 on Friday’s close. Inventories fell 1,100 tonnes to 2,215,925 tonnes.
  • In spreads, the sensitive ‘Tom’/Next traded at a $1.50 backwardation while cash/threes was at a $7.50 premium compared with $8.00 at Friday’s valuation. 
  • The three-month nickel price was $95 higher at $10,340 per tonne. 
  • “The news that India is considering cutting the 5% import duty on nickel will no doubt encourage the buy side of the market and should offset the negative news that Indonesian producers of low-grade nickel ore have asked to be allowed to export up to 2 million tonnes,” Malcolm Freeman at Kingdom Futures said on Monday.
  • But the price move was inhibited by stocks climbing 1,092 tonnes to 372,012 tonnes.
  • The three-month zinc price advanced to $2,638 per tonne, up $19, with stocks falling 375 tonnes to 427,225 tonnes. Three-month lead also pushed higher to $2,082 per tonne, an increase of $27 – stocks declined 400 tonnes to 193,300 tonnes. 
  • The three-month tin price traded at $21,010 per tonne, up a mere $5. Stocks edged five tonnes higher to 3,885 tonnes. Steel billet, cobalt and molybdenum were all neglected.

Dollar little changed; EU investor confidence brighter 

  • The dollar was largely steady, with the index at 102.37, while against the euro it was around 1.0525.
  • In data, the January EU Sentix investor confidence index was 18.2, beating the forecast 12.6. But November German industrial production rose just 0.4%, below the predicted 0.7%. 
  • Later, the USA will release its labor market conditions and consumer credit numbers. 
  • Further ahead, the key focus will be on tomorrow’s data from China – the country has its CPI, PPI, M2 money supply and new loans data scheduled. 
  • The People’s Bank of China (PBoC) has signalled its intent to focus more on preventing systematic financial risks while adding that it will “actively guide and stabilise market expectations” for the yuan.

(Additional reporting by Kathleen Retourne, editing by Mark Shaw)