Base metals prices mostly down, nickel around 2-mth lows

Base metals apart from aluminium and tin were in negative territory on Friday morning on the LME in sluggish trade – volumes remain low while markets in China are closed for the Mid-Autumn festival holiday.

With Chinese participants absent, investors are preparing for the Federal Reserve’s September meeting from next Tuesday.

The odds of a US rate rise this year fell after the release of a host of weak data on Thursday. The Fed funds futures market does not expect a single rate increase for 2016, according to the CME Group FedWatch tool.

On Thursday, the probability for a move in September was just 12 percent, November was 19.3 percent and December was 46.2 percent. Earlier this week, a majority expected a rate rise in December.

“With nothing in the economic numbers to say US rates should be moving up, and growing signs of losing momentum, expectations have largely diminished towards the Fed doing anything in September… the market is drifting back towards the view they might do nothing for quite a while,” ANZ said.

US data due later today includes the CPI, the core CPI, preliminary UoM consumer sentiment and preliminary UoM inflation expectations.

“With the continuing flow of negative global economic news it is hard to see why most of the metals will not seek to test the downside,” Kingdom Futures’ Malcolm Freeman said, highlighting today’s US consumer confidence number as crucial to the immediate trend.

In the metals, copper is hovering near its highest in three weeks – it recently traded at $4,769 per tonne, down $12 on Thursday’s close. Only around 3,000 lots have changed hands on Select so far.

“Copper has turned from looking one of the weakest of the base metals in recent months to the strongest, with prices holding on and building on to the gains seen on Wednesday,” FastMarkets head of research William Adams said.

Stocks fell a net 225 tonnes to 349,000 tonnes and cancelled warrants increased 2,000 tonnes to 55,200 tonnes.

Aluminium at $1,576 was up $4. Stocks and cancelled warrants both dropped 6,050 tonnes to 2,166,925 tonnes and 871,125 tonnes respectively.

In the spreads, the cash/Sept and 3m/Dec dates remain in a backwardation of $4 and $0.15 respectively while ‘Tom’/next is $3.75 back.

Nickel continues to trade around its lowest in two months – it was last at $9,675, down $40. Stocks fell 840 tonnes to 366,966 tonnes.

In nickel news, Filipino authorities are set to release on September 22 the results of their mining audit, according to reports. Ten mines, mostly nickel producers, have been suspended so far after apparently falling short of environmental standards.

Zinc at $2,219 was down $12 even after stocks dropped 1,125 tonnes to 444,450 tonnes and lead slipped $9 to $1,938 – stocks were unchanged at 187,850 tonnes

Tin recently traded at $19,100, up $55. Stocks fell 95 tonnes to 3,835 tonnes. Steel billet, cobalt and molybdenum were neglected.

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