Base metals coasting, ali availability slips as cancellation up

Base metals were coasting during Thursday’s LME premarket – while they are off their lows, they are substantially down on the start of the week.

General risk-off sentiment has also kept participants sidelined while the market looks for further direction, with tomorrow’s US jobs report looming large..

Overnight, the Federal Reserve’s June meeting minutes showed that most Fed members were cautious about adjusting rates following poor US labour data and the UK referendum.

Still, a majority indicated that if economic growth – particularly job gains – continued at a sufficient pace, a near-term rate rise would be appropriate.

In data today German industrial production undershot at -1.3 percent while later the ECB will release its monetary policy meeting accounts. From the US there will be challenger job cuts, ADP non-farm employment change, unemployment claims and crude oil inventories.

Aluminium at $1,657 per tonne was up $4 on Wednesday’s close after stocks fell a net 5,925 tonnes to 2,357,025 tonnes.

Cancelled warrants jumped 15,300 tonnes to 1,009,825 tonnes, pressuring on-warrant material to 1,347,200 tonnes – a multi-year low. The bulk of today’s cancellations were at Port Klang, rising 12,550 tonnes to 22,175 tonnes. The Trieste total climbed 8,450 tonnes to 8,450 tonnes.

Copper at $4,762 was $12 higher but has dropped below its 200-day moving average, which could prompt technical selling, participants said.

Stocks and cancelled warrants both dropped 1,825 tonnes to 220,725 tonnes and 48,625 tonnes respectively. Earlier this week, around 34,000 tonnes of material was delivered into LME sheds in Asia.

Shanghai copper still shows a discount of $50 to the LME price for September, which indicates further supplies coming into Asian warehouses, Triland said in a note.

“[Shanghai] exports are also likely to have been high in June, which points to subdued Chinese demand during the upcoming summer months,” Commerzbank noted. “What is more, China clearly imported more copper than it needed in the preceding months.”

Nickel at $9,855 was down $100. It had surged to more than $10,400 at the start of the week amid fears that the new government in the Philippines could shut mines due to environmental concerns. But participants have played down these fears and said any closures could still be some way off.

Meanwhile, producers have been selling into rallies, unconvinced that prices will head higher. Last week producers sold around 3,000 lots into the rally, Triland said. LME stocks rose 636 tonnes to 378,264 tonnes.

Zinc was up $17 at $2,123 after 950-tonne falls in stocks and cancelled warrants to 440,800 tonnes and 14,650 tonnes respectively. Lead was $13 higher at $1,847; stocks fell 100 tonnes to 184,650 tonnes.

Tin at $17,650 was down $250. While stocks were unchanged at 6,050 tonnes, cancelled warrants rose 25 tonnes to 1,420 tonnes. Steel, cobalt and molybdenum were neglected.

(Editing by Mark Shaw)