LME prices climb higher; ali capped by huge 166,000 tonne delivery

Aluminium prices on the London Metal Exchange have retreated from early morning highs after a significant delivery into LME-listed warehouses in Asia caused on-warrant stock to surge by 18%.

The three-month price was trading at a high of $2,151 per tonne – a $27 per tonne increase compared to Monday’s close price – before warehouse stock data was released at 9am UK time.

Some 166,225 tonnes were delivered in this morning, 99% of which entered Port Klang. This follows 22,175 tonnes on Monday and 41,650 tonnes on Friday February 9. The three-month price is now up just $9 compared to yesterday’s close price.

“The aluminium price will continue retreat over the next few hours as people take a step back after the stock data. No doubt this has to weaken prices,” an analyst said.

“The increase in the aluminium deliveries in Asia is because of the backwardation, which has resulted in pressure to liquidate. With the LME and SHFE aluminium stocks both increasing, there could be pressure on aluminium after Chinese New Year holidays,” a trader added.

Most of the complex was trading in positive territory this morning, other than lead, with the softer dollar underpinning prices.

Copper continues to recover 
The three-month copper price was $82.50 higher than Monday’s 5pm close at $6,913.50 per tonne. Inventories dipped a net 825 tonnes to 333,025 tonnes, with 8,300 tonnes freshly cancelled.

The red metal has recovered 3% since Friday’s close price and has rallied through another support level to trade back above $6,900 per tonne.

“Only copper has posted any volume of note so far as it outperforms in both price and volumetric terms amid onshore buying and some Western short-covering encouraged by the macro stability,” Marex Spectron said.

“So long as we see the recent macro stability maintained I feel we may be in a short-term (and medium-term) ‘value zone’ for some of these metals with the US dollar looking a little tired in the immediate term. Timing as always is key but I would expect any dips to be well supported this afternoon,” it added.

Base metals prices 

  • The three-month aluminium price increased $9 to $2,133 per tonne. Stocks increased 158,925 tonnes to 1,275,500 tonnes.
  • Nickel’s three-month price was $130 higher at $13,230 per tonne. Inventories declined 2,154 tonnes to 339,006 tonnes.
  • The three-month zinc price was most recently trading at $3,416.50 per tonne, an increase of $35.50. Stocks fell 825 tonnes to 156,125 tonnes.
  • Lead’s three-month price was $10 lower at $2,506 per tonne. Stocks declined 1,125 tonnes to 122,700 tonnes.
  • The three-month tin price increased $62 to $21,160 per tonne. Inventories declined 10 tonnes to 1,925 tonnes.

Currency moves and data releases

  • The dollar index declined 0.27% to 89.85.
  • In other commodities, the Brent crude oil spot price was down 0.35% to $62.41 per barrel.
  • In data on Monday, Chinese new loans surged to a record 2.9 trillion yuan ($450.9 billion) in January – nearly five times the previous month. Meanwhile, the country’s M2 money supply also surprised to the upside with a reading of 8.6%, against an expected print of 8.2%.
  • The economic agenda is relatively light today with UK data including consumer price index (CPI), producer price index (PPI) input, retail price index, core CPI, house price index and PPI output.
  • There is also the NFIB small business index from the United States of note.
  • In addition, US Federal Open Market Committee member Loretta Mester is speaking.