Base metals kicked off LME Week on a steady note in premarket trading in London on Monday October 31 – prices are broadly marking time while participants look to gauge the industry mood.
“This week is a good opportunity to look people up, touch base, and try and see how things will pan out for the rest of the year. The market may trade sideways for a little while,” an analyst said.
Still, short-term sentiment has turned more positive recently amid solid manufacturing figures from the US, Europe and Asia, with prices hovering around last week’s multi-week peaks. Tin again stood out, hitting a fresh high since September 2014, bolstered by the critically low levels of LME inventories.
As well as LME Week events and meetings, which are front-loaded at the start of the week, November traded options will be exercised on Wednesday so there may be little significant price movement until then, traders said.
“Prices are holding around the larger open interest strike prices,” Malcolm Freeman of Kingdom Futures noted.
For now, the wider market focus will be on US data due later today, which includes the core PCE price index, personal spending, personal income and the Chicago PMI.
Following that, the macroeconomic news-flow will centre on the Chinese manufacturing PMI on Tuesday. Consensus is for Chinese factory activity to have remained in expansion mode in October, with the official manufacturing PMI expected at 50.3 and the Caixin manufacturing PMI at 50.2.
The Federal Reserve will also hold its monetary policy meeting on November 1-2. With the presidential election in less than a fortnight, the policy board is unlikely to adjust the Federal Funds rate.
Following stronger-than-expected third quarter advance US GDP data, however, roughly 74% of investors expect the Federal Reserve to normalise interest rates in December.
In the metals, the three-month tin price was $15 lower at $20,630 per tonne, having hit $20,675 earlier. Warehouse stocks were unchanged at 2,895 tonnes, the lowest since June 2004, with the available warrant tonnage of 1,130 tonnes the lowest since July 1989. In nearby spreads, ‘tom/next’ traded between $6.50 and $5.00 backwardation.
The three-month copper price was unchanged at $4,843 per tonne, just off a three-week high of $4,852.50 hit earlier in the day. Inventories fell a net 5,575 tonnes to 320,825 tonnes.
The run-up in the copper market last week is likely to be unsustainable – the lead-up to LME Week and CESCO Asia may be influencing the copper price and market indicators such as the China premium, Barclays Research said in a Sunday report.
“We expect copper to come under renewed pressure once these events conclude. In short, copper may be popping now but setting itself up for a drop later,” the bank said.
The three-month aluminium price was trading at $1,724 per tonne, up $6 and around the highest since July 2015. Stocks declined 2,200 tonnes to 2,141,300 tonnes. The cash/threes spread was around a small contango of $1,00.
The three-month nickel price climbed $110 to $10,535 per tonne although stocks jumped 1,848 tonnes to 363,558 tonnes. The three-month zinc price rose $12.50 to $2,409 per tonne; stocks dropped 625 tonnes to 450,800 tonnes. The three-month lead price recently traded at $2,078, a $7.50 gain – stocks were down 450 tonnes at 188,700 tonnes.
Steel billet, cobalt and molybdenum were neglected.
(Additional reporting by Vivian Teo in Singapore, editing by Mark Shaw)