Metals bed in LME Week stability; zinc/tin/ali set multi-yr highs

Base metals markets looked to lock in recent gains during LME premarket trading on Tuesday November 1 while many participants that have gathered in London for LME Week events look for signs of improved conditions in coming weeks, traders said.

Zinc rose to a five-year high at one stage on news Glencore had closed a mine in Australia, tin set its best for 25 months while technical tightness remains in place, aluminium held around 15-month peaks and copper rose to a one-month high, visiting the top end of its current range.

“When people are in town, they try and look on the positive side, and some of the metals are doing well, it has to be said. But we do need to see more two-way business – otherwise the markets can be hit by the systems and algos, like lead on Monday,” a trader said.

Prices have since settled back from their highs in European trading although wider macroeconomic developments have provided a positive undercurrent, analysts said.

“The metals look well placed to push higher, helped by the stronger PMI data out of China,” William Adams of Metal Bulletin said.

Earlier today, China’s National Bureau of Statistics showed the country’s official manufacturing PMI for October at 51.2 – better than the market forecast of 50.4 and September’s reading, also of 50.4.

The Caixin manufacturing PMI for September came in at 51.2 – above expectations of 50.2 and September’s reading of 50.1. This was also the fastest growth in the sector in two years. Additionally, the country’s official non-manufacturing PMI, which represents the services sector, was at 54.0 in October, up from September’s figure of 53.7.

Key US economic due later today includes the final manufacturing PMI, the ISM manufacturing PMI, construction spending, IBD/TIPP economic optimism and ISM manufacturing prices.

In the metals, the three-month zinc price touched $2,485 per tonne – the highest since August 1, 2011 – before recent trade at $2,451, a $7 loss from Monday’s close. In inventory data, stocks fell a net 75 tonnes to 450,725 tonnes.

Today’s upwards spike followed news that Glencore has shuttered its Black Star zinc open cut mine – part of its Mount Isa Mines complex – in northwest Queensland, Australia, after mining out the existing reserve.

The three-month copper price hit $4,888 before settling at $4,872 per tonne, up $19. Stocks fell 1,350 tonnes to 319,475 tonnes.

“It looks good but copper has been in a $400 range for some time now – roughly with a ceiling near $4,900 – so it needs to find fresh ground,” another trader said.

The three-month aluminium price touched $1,740 and then traded at $1,737.50 per tonne, up $3.50 from Tuesday’s close. The aluminium spread remains narrow, with a small contango in the benchmark cash/threes of $0.50.

The three-month tin price at $20,800 per tonne was up $100. Stocks and cancelled warrants were unchanged for the second day in a row at 2,895 tonnes and 1,765 tonnes respectively. In spreads, cash/threes traded at a backwardation of $180 while ‘tom/next’ was recently at a $6 premium.

The three-month lead price was $3 lower at $2,062 per tonne; inventories were unchanged at 188,700 tonnes. In the previous session lead fell viciously in a few minutes to a one-week low of $2,020 when systems-based sell-stop orders were triggered, although much of these losses were regained by the end of the day.

The three-month nickel price dipped by $70 to $10,405 per tonne – stocks fell 534 tonnes to 363,024 tonnes.  Steel billet, cobalt and molybdenum were neglected, with a five-tonne fall seen in cobalt stocks.

 (Additional reporting by Vivian Teo in Singapore, editing by Mark Shaw)