Base metals upbeat, copper stocks surge in Asia

Base metals were all in positive territory on Monday morning on the LME, with copper edging up to its highest in more than three weeks after a disappointing US employment report on Friday pushed back expectations for a rate rise.

Copper climbed to a high of $4,748 – its strongest since May 12 – before recent trade at $4,717.50 per tonne, up $29.50 on Friday’s close. Around 8,000 lots have changed on Select so far.

Copper stocks surged a net 20,725 tonnes to 174,400 tonnes – a move centred on Singapore and Korea – which “puts the decline in China into context”, Commerzbank noted.

“The high Chinese copper imports in the fourth quarter of 2015 and the first quarter of 2016 could well be attributed to traders reacting in anticipation of further currency weakness,” it said.

The move was widely expected while Chinese copper smelters continue to deliver metal into LME-listed warehouses in Asia because of attractive warehouse incentives and while the physical market is lacklustre, traders said.

Copper cancelled warrants fell 525 tonnes to 49,950 tonnes.

Before the weekend, the US non-farm employment change came in at 38,000 – the weakest number in almost six years, below the expected 159,000 and lower than last month’s reading of 123,000, which was revised down from 160,000. The miss may prompt US policy-makers to put delay increasing rates.

“While global fundamentals for the copper market remain bearish, copper could experience a last hurrah in the short term if the anticipated US hiking path is delayed (or halted),” Barclays noted.

Friday’s data sent the dollar to a three-week low – the index was last at 94.23.

In data, Chinese trade figures are scheduled for Wednesday, with the CPI and new loan figures for May tentatively scheduled over June 10-15.  Markets will be looking to the impact of renewed weakness in the Chinese currency, which has slipped to a five-year low against the dollar.

In the other metals, aluminium was last at $1,553.50, up $9.50. Stocks and cancelled warrants both fell 6,600 tonnes to 2,501,625 tonnes and 1,114,500 tonnes respectively.

Nickel at $8,680 was up $185, its strongest in more than two weeks. Stocks fell 1,356 tonnes to 395,760 tonnes.

Zinc at $2,020 was $28 higher. In supportive inventory moves, stocks dropped 950 tonnes to 379,875 tonnes and cancelled warrants jumped 7,125 tonnes to 32,175 tonnes.

“It is now trading at a nearly 12-month high, which is outstanding when compared with the rest of the complex,” broker Triland noted. “The big question mark is now whether it can continue now that any immediate downside threat has been removed from the other metals, mainly copper.”

Lead at $1,738 was up $12 and around its highest in two weeks – stocks were up 50 tonnes to 185,425 tonnes – and tin at $16,800 was up $210, also its strongest in two weeks. Stocks edged 25 tonnes lower to 7,130 tonnes.

Steel, cobalt and molybdenum were neglected.

(Editing by Mark Shaw)