Market cautious as LME base metals prices decline in morning trading

Base metals prices continued to fall on the London Metal Exchange during morning trading on Friday April 7, following a general dip into Thursday’s close. 

Copper dropped almost 0.7% on Thursday while zinc fell back below the $2,700 barrier as it decreased over $100 per tonne. Tin, which was the only metal to gain on the close of the LME yesterday, also declined this morning. 

Prices yesterday dipped at the close after selling emerged on Thursday afternoon that was thought to be driven by Chinese funds. 

“The general theme is that China were away at the start of the week and, over the past few days, the Chinese have been selling into base rallies. A noticeable driver affecting base metals on the LME was a sell-off in ferrous space,” one analyst said.

The industry will have one eye on US president Donald Trump as he meets China’s president Xi Jinping for a second day of bilateral talks between the economic powerhouses. Geopolitical and trade relations are expected to be key talking points. 

There may also be some caution given geopolitical developments with the USA attacking a Syrian air base. 

Peru strikes expected to begin as copper price falls 

  • The three-month copper price fell by $43.50 per tonne to $5,814.
  • In warehouse stocks data, copper declined by a net 5,225 tonnes to 265,325 tonnes; this meant inventories declined for the 17th day in a row.
  • Potential disruptions continue to buoy copper prices as union members working at Southern Copper Corp’s Toquepala and Cuajone mines in Peru are expected to down tools on Friday, with demands for increased profit sharing and improved working conditions.
  • Despite this, ANZ Research noted that sentiment in the copper market remained positive with industry participants finishing their annual gathering in Santiago, Chile.
  • “Codelco ceo Nelson Pizarro came away from meetings with Chinese delegates thinking demand will be stronger than expected this year,” the bank said.

 Prices and stocks call across the board

  • The three-month aluminium price saw a $7 decline during premarket trading on the LME, sitting at $1,946 per tonne.
  • Stocks continued to decline, falling 18,750 tonnes to 1,818,300 tonnes.
  • “Yesterday saw the almost daily reduction in LME stocks and, in the case of aluminium, there has only been one delivery of metal (1200t Singapore) in the last month,” noted Malcom Freeman of Kingdom Futures.
  • The three-month nickel price was down $95 to $9,985 per tonne. Stocks fell 864 tonnes to 375,702.
  • The three-month zinc price declined by $29 per tonne to $2,697. The metal hit highs of over $2,809 during the afternoon on Thursday, but since then has continued to fall.
  • Zinc inventories were down 1,050 tonnes to 367,400 tonnes.
  • The three-month lead price fell by $50.50 per tonne and started trading at $2,244.50. Stocks fell 2,775 tonnes to 173,025 tonnes.
  • Tin was the only base metal to see a price increase during the close of trading on Thursday but the three-month price declined $110 to $20,200 per tonne this morning.
  • Stocks in tin were unchanged for the second day in a row.

Currency moves and data releases 

  • The FTSE 100 was down 7.78 to 7295.42.
  • The Brent crude oil spot price was up 1.20% to $55.52 per barrel.
  • The dollar index rose 0.03 to 100.77.
  • In data yesterday, weekly US jobless claims ending March 31 stood at 234,000, below the forecast of 251,000. Additionally, challenger job cuts year-on-year in March were at -2%.
  • Data out already includes Japan’s average cash earnings, leading indicators, German industrial production and trade balance.
  • Data out later today includes: French industrial production, Italian retail sales, UK manufacturing and industrial production, construction output and, in addition to the US employment report, US data is out on wholesale inventories and consumer credit.