LME base metals rebound; nickel, copper leading higher

Base metals prices on the London Metal Exchange were higher across the board this morning, Friday November 17, while prices begin to recover from yesterday’s slump.

Nickel prices fell a further $320 per tonne at the close yesterday after falling 16% over the last few weeks.

“The weak economic data in China earlier this week has sparked some concerns about demand for stainless steel and nickel in coming months. This was enough for investors to lock in some gains after the 20% rally in prices over the past couple of months,” ANZ Research said on Friday.

The three-month nickel price recovered $140 per tonne this morning taking advantage of the weaker dollar – which is down 0.22% this morning.

Copper prices were also stronger this morning, climbing $41 per tonne higher while falling stocks provide support. On-warrant LME stocks have fallen 22,850 tonnes since Monday including over 6,000 tonnes cancelled today across Singapore and Kaohsiung.

The rest of the complex edged higher but began to consolidate at current levels following a week where base metals have come under pressure and lacked significant direction.

Aluminium holds strong

  • The three-month aluminium price increased $4 to $2,106 per tonne.
  • Stocks declined a net 3,675 tonnes to 1,157,800, as well as 3,825 tonnes freshly cancelled.
  • Aluminium stocks at LME-listed warehouses recently hit their lowest since the first quarter of 2008.
  • “We are constructive on aluminium over the very short-term, although we cannot rule out further weakness in the immediate term because our momentum-based indicators are negative,” Boris Mikanikrezai, Metal Bulletin analyst said.
  • “Whether the Chinese winter cuts will give a meaningful impetus to aluminium prices remains to be seen,” he added.
  • Winter cuts in China officially came into effect this week. Though market participants previously expressed doubt that Chinese winter capacity cuts will live up to expectations, the government’s continued determination to enforce supply-side reforms in the aluminium sector has renewed the positive outlook for light metal prices.
  • “China Hongqiao is considering moving production overseas to combat China’s push to limit aluminium and other industrial capacity. The government is driven to reduce overcapacity and pollution from its industrial sectors,” Commonwealth Bank of Australia’s research note said.
  • “China’s northern cities are being targeted in particular during the winter months. Chinalco were more understanding of government measures to limit overcapacity. The company believes that if authorities relax their stance on overcapacity, aluminium output will surge and oversupply the market,” it added.

Base metals prices

  • The three-month copper price was up $41 to $6,779 per tonne. Stocks declined 3,850 tonnes to 247,700 tonnes.
  • Nickel’s three-month price increased $140 to $11,510 per tonne. Inventories dipped 1,188 tonnes to 381,258 tonnes with 7,302 tonnes freshly cancelled.
  • The three-month zinc price was at $3,160 per tonne, an increase of $15. Stocks fell 2,475 tonnes to 226,775 tonnes.
  • Lead’s three-month price was up $22 to $2,425.50 per tonne. Inventories dipped 100 tonnes to 145,875 tonnes.
  • The three-month tin price increased $60 to $19,410 per tonne. Stocks were unchanged at 2,145 tonnes.

Currency moves and data releases

  • The dollar index was down 0.21% to 93.67.
  • In other commodities, the Brent crude oil spot price was up 0.78% to $61.84 per barrel.
  • The economic agenda is light today with mainly US building permits and housing starts of note. European Central Bank president Mario Draghi is also scheduled to speak.