Base metals mixed in thin trade, copper around 3-wk highs

Base metals were mixed on Thursday morning on the LME, with copper hovering around three-week highs while aluminium, lead and zinc were lower.

Volumes are thin, with China absent for a two-day national holiday – markets there will reopen on Monday.

Yesterday, the base metals climbed on improving Chinese data and a weaker dollar. Chinese M2 money supply for August at 11.4 percent beat the expected 10.5 percent while new loans at 949 billion yuan were significantly better than the forecast of 725 billion yuan.

China previously published upbeat Chinese industrial production, fixed asset investment and retail sales data, all of which were close to or better than expected, which helped ease concerns about the country’s economic health.

Investors are preparing for the Federal Reserve’s September meeting from next Tuesday. Over the past two weeks before a media blackout, Fed members have given mixed messages on growth, the global economy and the removal of accommodative policy.

Market participants see the odds of a September rate increase at just 15 percent, according to the CME Group FedWatch tool. Most now see an increase only in February next year, later than consensus of December a day ago.

In currencies, the dollar index was last little changed at 95.36.

A string of US data is due later today including core retail sales, the PPI and the core PPI, the Philly Fed manufacturing index, retail sales, unemployment claims, the current account, the Empire State manufacturing index, the capacity utilisation rate, industrial production and business inventories.

In the metals, copper is hovering around its three-week highs – it recently traded at $4,786 per tonne, up $14.50. But only around 3,000 lots have changed hands on Select so far.

“Copper was the big mover [on Wednesday after] strong economic data in China spurred speculation that demand will strengthen. This was also supported by a fall in inventories both on the London Metal Exchange and the Shanghai Futures Exchange,” ANZ said.

In today’s warehouse data, copper stocks fell a net 2,275 tonnes to 349,225 tonnes – a move centred on Singapore. Cancelled warrants climbed 325 tonnes to 53,200 tonnes.

Aluminium edged $3 lower to $1,583, with stocks and cancelled warrants both down 6,025 tonnes at 2,172,975 tonnes and 877,175 tonnes respectively. In spreads, the cash/Sept date is in a backwardation of $1 as is the 3-mth/Dec date.

Nickel continues to trade below $10,000 – it was last at $9,855, up $15, having fallen to a two-week low yesterday.

“We would simply put this down to nickel’s better overall performance against the basket earlier this year is now simply coming back into line,” broker Triland noted.

Stocks edged six tonnes lower to 367,806 tonnes and cancelled warrants were down 54 tonnes to 117,840 tonnes.

Zinc at $2,264 was down $10. Stocks and cancelled warrants both dropped 1,100 tonnes to 445,575 tonnes and 24,225 tonnes respectively.

“At least there is good chance that a strong support has been found above $2,200, which supports our view that despite what we’ve seen this week the damage on the charts should be limited,” Triland said.

Lead at $1,949 was down $11.50 – stocks were unchanged at 187,850 tonnes – but tin recently traded at $19,320, up $120, after stocks fell 35 tonnes to 3,930 tonnes.

Steel billet, cobalt and molybdenum were neglected. Cobalt stocks and cancelled warrants both fell four tonnes to 626 tonnes and 90 tonnes respectively while molybdenum cancelled warrants rose 12 tonnes from zero tonnes.

(Editing by Mark Shaw)