Base metals range in thin conditions, tightness on Nov/3-mth date

Base metals were in consolidation mode during Friday’s pre-LME trading as the market came off the highs posted earlier this week and looked to end the week in an unspectacular fashion.

“Aluminium’s turn back from fresh highs and with other markets appearing to be capped, suggests there is overhead selling around – probably producer selling. This will need to be absorbed if the rallies are to extend, but with volumes light that may take some doing,” FastMarkets analyst William Adams said.

With no data of significance today the market may struggle to find direction, market participants said.

Providing a spark of interest however was spread activity. Although nearby spreads were in a contango for all bar tin, further out there is a backwardation on the Nov/3-mth date for all of the metals. Aluminium and copper at $0.50, nickel at $1, zinc at $1.45, lead at $1.50 and tin $5.

Copper at $4,790 per tonne was down $30 on the close while stocks fell 2,800 tonnes to 210,625 tonnes and cancelled warrants at 4,625 tonnes to 59,375 tonnes.

Aluminium at $1,680 was down $3 and off the fresh 13-month highs yesterday when it broke above $1,700. Traders said that the move was due to speculators and fund activity and as it did not reflect fundamentals it was unlikely to hold.  

Stock moves were routine and fell 7,100 tonnes to 2,245,050 tonnes and cancelled warrants at 940,025 tonnes increased 3,750 tonnes. Earlier this week around 25,000 tonnes arrived in Detroit which market sources said was due to an increase in ISTIM

Zinc at $2,277 was $18 lower and stocks and cancelled warrants fell 1,175 tonnes to 455,875 tonnes and 24,250 tonnes respectively.

Lead at $1,877 was down $17 while stocks and metal booked for removal fell 100 tonnes to 187,025 tonnes and 68,525 tonnes respectively.

At the beginning of the week, the China Ministry of Land and Resources announced that all 26 zinc and lead mines in the main mining province of Hunan were to be temporarily shut down. This equates to around 150,000-200,000 tonnes of zinc.

“The mine closures now could cause the market for refined zinc also to tighten further, especially given that Chinese zinc smelters had already produced somewhat less refined zinc in the first seven months of the year,” Commerzbank said.

Nickel at $10,315 fell $35 while stocks fell 60 tonnes to 373,515 tonnes as a 1,086 tonne arrival into Johor was offset by declines in both Kaohsiung and Rotterdam. Cancelled warrants at 112,344 were lifted by 3,030 tonnes of freshly cancelled material – a move centred on Kaohsiung and Singapore.

Tin at $18,400 was up a marginal $10 and stocks were down 170 tonnes to 4,725 tonnes. 

Steel, cobalt and molybdenum were all neglected with no changes to stocks.

(Editing by Archie Hunter)