Base metal prices recover, copper stock arrivals pause

Base metal prices came off earlier lows during premarket trading on the LME on Tuesday December 20 when the recent flow of copper into exchange-listed warehouses paused.

This lifted the three-month copper price, which brought the others up in its wake. The red metal recently traded at $5,532 per tonne, up $36 on Monday’s close.

Stocks fell a net 1,450 tonnes to 344,025 tonnes and cancelled warrants rose 9,675 tonnes – 7,725 tonnes were cancelled in Port Klang and 3,100 tonnes in Liverpool.

This tightened the sensitive ‘Tom’/next spread somewhat – it recently traded at a backwardation of $0.50 per tonne. This week marks ‘Third Wednesday’ when the December date will become prompt.

But today’s stock fall is dwarfed by increases over the six previous consecutive days, which raised availability by more than 60%.

Take-up has been slow today – fewer than 5,000 lots have changed hands on Select so far. Many market participants are unwilling to take a position ahead of the seasonal holidays.

“Dips since mid-October have tended to be short-lived. This one may run a little longer because there are still seven working days left in 2016 but we generally expect the bullish undertone to remain in place so we expect good underlying support to be found before too long,” Metal Bulletin analyst William Adams said.

The world’s largest copper mine, BHP Billiton-owned Escondida, started formal wage negotiations with workers on Monday. Escondida’s negotiations are seen as a benchmark for the copper industry.

In currencies, the dollar index remained strong at 103.36, up 0.2%. In data, the EU current account at €28.4 billion beat the forecast €24.2 billion. The only other data of note today is the Chinese CB leading index.

Data published yesterday by the National Bureau of Statistics showed that property prices in China’s 70 biggest cities barely climbed in November. Chinese authorities have taken steps to cool the real estate boom and remain “deeply concerned” about property bubbles, Commerzbank noted.

The three-month aluminium price at $1,718 per tonne was up $6. Spread tightness may provide some interest – the cash dates out to three months are all in a backwardation. Still, ‘Tom’/next was recently in a small contango of $0.45 per tonne.

Stocks fell 2,825 tonnes to 2,109,450 tonnes and cancelled warrants at 659,425 tonnes were 4,725 tonnes lower.

The three-month nickel price at $10,975 per tonne was $85 higher. Its recovery has been aided by reports that Indonesia may relax the ore export ban it introduced in 2014.

Stocks rose 216 tonnes to 371,616 tonnes and cancelled warrants fell 900 tonnes to 125,934 tonnes.

The three-month zinc price rose $20 to $2,627 per tonne; stocks fell 575 tonnes to 429,075 tonnes. Sister metal lead recently traded at $2,185 per tonne, an increase of $15. Although stocks at 184,225 tonnes were down 2,300 tonnes due to a decline in Busan, this was offset by a fall in cancellations of the same magnitude at the same location.

The three-month tin price at $21,070 per tonne was down $30 – it was the only metal still in negative territory. Stocks rose 160 tonnes to 3,490 tonnes, their highest since October 4.

Steel, cobalt and molybdenum were neglected.

(Editing by Mark Shaw)