LME base metal prices mixed; nickel and tin prices move higher

Base metals prices on the London Metal Exchange were on divergent paths this morning, Monday December 4, while the dollar rebounded.

“The dollar index avoided breaking below 92.50 on Friday – our line in the sand – with a low of 92.60. It has since rebounded to 93.31 on the back of the progress made on the tax reform legislation,” William Adams, Metal Bulletin senior analyst, said.

The three-month copper price dipped $14.50 per tonne despite positive sentiment from last week’s CESCO meeting buoying sentiment.

Lead prices dipped from Friday’s six-week high this morning and zinc followed its sister-metal lower.

“We viewed the recent weakness in most of the base metals as being consolidation [while] profit-taking took hold ahead of November’s month end,” Adams said.

“Overall we remain quietly bullish for most of the metals and expect range trading, so would not be surprised to see metals prices rebound further off recent lows,” he added.

Some metals prices were finding some support by recent Chinese purchasing managers’ index (PMI) readings, which although below expectations for the Caixin number, showed that China’s economy remained in expansion mode, some market watchers noted.

“While the official gauge showed another month in expansionary territory, the private sector version by Caixin dipped slightly. Even so, it remained above 50 and was enough to remove any doubt in investors’ minds about the outlook in the short term,” ANZ Research said on Monday.

The three-month nickel price is trading over $100 per tonne higher while LME stocks continue to decline, tin prices also began the day in positive territory.

“[Nickel was] last week’s underperformer reaching a low of $10,940 per tonne on Friday – a rebound continues this morning amidst a rally in ferrous, with iron ore hitting highs not seen since September 9,” Marex Spectron’s morning note said.

Aluminium prices remain little changed on the exchange this morning, “it is difficult for [the] aluminium price to move higher as smelters lack drive to cut production due to high smelting profits,” China’s Minmetals Jingyi Futures said.

Copper lower; but price supported

  • The three-month copper price dipped $14.50 to $6,818.50 per tonne.
  • Stocks declined 1,100 tonnes to 182,425 tonnes.
  • Copper’s price has underlying support from continued strike concerns at Southern Peru Copper Corp and Teck’s Quebrada Blanca copper mine.
  • A group of unionized workers at Teck’s Quebrada Blanca copper mine could go on strike if government-mediated talks fall through, Metal Bulletin reported.

Base metals prices

  • The three-month aluminium price was down $2 to $2,072.50 per tonne. Stocks declined 4,320 tonnes to 1,104,500 tonnes with 3,450 tonnes freshly cancelled.
  • Nickel’s three-month price was $110 higher at $11,400 per tonne. Inventories fell 1,572 tonnes to 378,528 tonnes, with 300 tonnes freshly cancelled.
  • The three-month zinc price dipped $19 to $3,230 per tonne. Stocks were 1,825 tonnes lower at 209,700 tonnes.
  • Lead’s three-month price was $6.50 lower at $2,538.50 per tonne. Inventories declined 100 tonnes to 144,900 tonnes.
  • The three-month tin price was $65 higher at $19,520 per tonne. Stocks were unchanged at 2,395 tonnes.

Currency moves and data releases

  • The dollar index was up 0.40% to 93.23.
  • In other commodities, the Brent crude oil spot price was down 0.72% to $63.15 per barrel.
  • China’s November Caixin PMI was at 50.8 versus an expected reading of 51.2. A reading above 50 indicates expansion, while below signals contraction.
  • On November 30, China’s official November PMI came in at 51.8, beating both the forecast of 51.4 and the previous figure of 51.6.
  • On Sunday, the US Senate passed its tax reform bill. “In the next step, a House-Senate conference committee will work to resolve the differences between the House and Senate tax bills. With both bills calling for a reduction in the corporate tax rate to 20%, US tax reform progress is expected to help sustain growth in corporate capital investments and [merger and acquisition] activities,” Credit Suisse said.
  • Data due later today includes US factory orders, UK construction PMI, and European Sentix investor confidence and producer price index.