Metals maintain mini-upswing, look to close H1 on upbeat note

Base metals largely continued this week’s mini-upswing during Thursday LME premarket trading, hitting multi-month highs in many cases on the last day of the month and looking to end the first half of the year on an upbeat note.

Traders said industrial metals have recovered robustly from the Brexit-based sell-off seen a week ago – a broader ‘risk-on’ tone has emerged, equity markets have bounced back and the dollar has stepped back slightly.

“The markets seem happy to ignore overall fundamentals and go with the flow. The global stock markets have all made modest gains, and oil has rallied back up through the $50 level,” Malcolm Freeman of Kingdom Futures said.

In the metals this morning, copper, lead and nickel all touched their best levels for some two months while zinc hit an 11-month high above $2,100 before a heavy stock increase choked off its move.

In other markets, the UK FTSE swung higher again and was around 6,360 while spot Brent crude oil was above the $50 level at some $50.80 per barrel following another large decline in US inventories.

Markets continue to trade as if another round of quantitative easing had been announced, with real economic Brexit fears sidelined, broker ANZ noted.

“Brexit continues to dominate the news but no longer the price action,” the bank said. “It appears optimism is rising that this event won’t be the catalyst for global market volatility. Let’s hope the market is right but there’s a lot of water yet to flow under the bridge.”

On the data side so far, Japanese May preliminary industrial production disappointed, falling 2.3 percent, while German retail sales for the same month were better than expected, rising 0.9 percent. Among other European releases, French consumer spending declined 0.7 percent in May, more than the forecast 0.1-percent fall. This afternoon, key US figures include weekly jobless claims and the Chicago PMI.

Copper rose as high as $4,865 per tonne before settling at $4,843 per tonne, up $5 on Wednesday’s close. Warehouse stocks fell a net 2,675 tonnes to 191,525 tonnes.

Zinc, as high as $2,116 earlier, was recently at $2,101, a $12 gain still. Stocks climbed 16,950 tonnes to a three-month high of 443,175 tonnes due to a 18,200-tonne warranting in New Orleans.

Nickel peaked at $9,550 before holding at $9,485, a $45 advance. Inventories fell again, down 948 tonnes at 379,338 tonnes, now the lowest since October 2014.

In the other metals, aluminium was last at $1,639, up $3.50, with stocks falling 5,750 tonnes to a fresh low since January 2009 of 2,387,850 tonnes. Lead business at $1,780 was $10 higher, with inventories falling 1,025 tonnes to 185,725 tonnes.

Tin was at $17,040, down a modest $45, but stocks fell 75 tonnes to a two-month low of 5,985 tonnes. In others, steel billet, cobalt and molybdenum were all neglected – inventories of the latter were down 12 tonnes to 96 tonnes.

(Additional reporting by Ewa Manthey, editing by Mark Shaw)