LME lead cancellations surge; metal prices up on short covering

Three-month lead prices surged higher during trading on Monday January 23 as a significant amount of metal was booked for removal in London Metal Exchange sheds.

The heavy metal recently traded at $2,343 per tonne, up $34 on the previous day’s close. Cancelled warrants were up a net 32,075 tonnes to 66,200 tonnes.

The bulk of the move was centred on Busan, where 26,950 tonnes were cancelled, while Barcelona was up 5,525 tonnes. Lead availability is now at its lowest since September 2016, with on-warrant material at 129,025 tonnes.

LME  warrant-holding data showed there is one tom position and another for cash at 80-89%.

The holder, said to be a large trading house, has been steadily increasing its position – at the start of the month it was at 30-39%.

In spreads, the sensitive tom/next was last at a backwardation of $4, while cash/3-mth was last at $7.25b.

Rest of base metals prices push higher as shorts cover

  • The rest of the metals have risen as shorts cover positions ahead of the Chinese New Year, which begins at the end of this week.
  • “Hard to pinpoint the exact reason for these moves but, in essence, it feels like the west went home short looking for a decent Chinese offer to re-emerge along with ongoing trade selling and it just never eventuated,” Marex Spectron said.
  • “The dips have been shallow and with limited natural selling the path of least resistance has been higher. Having seen the complex under pressure this time last Friday it feels like onshore specs are getting chopped around and have been forced to cover, with Chinese New Year looming large the appetite of the shorts to continue fighting these moves has diminished,” they added.
  • The three-month copper price recently traded at $5,816 per tonne, up $48 on Friday’s close. Stocks were down 750 tonnes to 274,650 tonnes and cancelled warrants increased 3,650 tonnes to 74,800 tonnes.
  • Aluminium was up $15 at $1,860 per tonne, while stocks were down 9,350 tonnes to 2,289,275 tonnes. Cancelled warrants jumped 16,925 tonnes to 660,675 tonnes after more than 18,500 tonnes were freshly cancelled in Detroit.
  • Nickel was $150 higher at $9,850 per tonne but has yet to get back above $10,000 in Monday’s trading. Stocks were down 36 tonnes to 371,970 tonnes and cancelled warrants fell 9,324 tonnes.
  • Zinc recently traded at $2,803 per tonne, up $36. Stocks and cancelled warrants were both 1,850 tonnes lower at 412,500 tonnes and 136,425 tonnes, respectively.
  • Tin was up $30 at $20,140 per tonne, although stocks were 475 tonnes higher at 4,655 tonnes. Steel, cobalt and molybdenum were all neglected, with no change in stocks.