Base metals prices were mixed but steady in Friday’s LME premarket, taking a breather after Thursday’s sell-off in which all hit multi-month lows.
The partial recovery was aided by trends in Asian equity markets, where temporary stability was seen following Thursday’s better-than-expected US economic data. But concerns over slowing US and Chinese economies and signs of a recession in Europe will keep financial markets under pressure.
“Yesterday’s aggressive sell-off has seen prices test levels not seen for some time,” a trader said. “Chart-wise, copper, nickel, lead and tin are proving difficult in finding any real indication of support levels. That being said, nearby copper spreads are still healthy, which may help to keep any further slide in check.”
“After this week’s turmoil, the market is taking a pause for breath this morning,” Vicky Sanders at Marex Spectron said. ”Base metal prices rebounded overnight against yesterday’s settlement levels although copper and zinc have come under pressure.”
In the previous session waves of investment selling, long liquidation and technical sales sent prices lower across the board. Global economic prospects have deteriorated markedly in recent days, triggering the sharp downshift in sentiment this week as well as a flight from risk assets in general.
Given the turbulence in mainstream financial markets at present, further derisking sales are likely in commodities, with data events expected to trigger knee-jerk price movements in metals.
The data agenda is fairly light, with US housing starts, Prelim UoM consumer sentiment and prelim UoM inflation expectations scheduled. In addition, German Bundesbank president Jen Weidmann and US Federal reserve chair Janet Yellen are speaking.
Focus on Yellen’s comments today will centre on the end of quantitative easing this month, in particular several FOMC members suggested that it might be wise to delay the end of QE, leading to some fluctuations in the currency market.
Still, the dollar seems to have stabilised for now around 1.28 against the euro, as have equities – key US stocks indices ended in positive territory – and Brent crude oil, which was last up 48 cents at $86.29 per barrel albeit still close to four-year lows.
Towards the close, metals may well see some end-week covering and position-squaring, given the selling seen since mid-week, as market participants look ahead towards the annual LME Dinner Week in London, which starts on Monday.
Copper at $6,539 per tonne was down $13 on Thursday’s close and back around six-month lows. Stocks ticked a net 150 tonnes higher to 157,825 tonnes and cancelled warrants were 50 tonnes lower at 26,325 tonnes.
Zinc ticked $1 higher in price to $2,221 although stocks and cancelled warrants were both 1,625 tonnes lower at 723,150 tonnes and 139,275 tonnes respectively.
Aluminium at $1,927 was up $13 in price – stocks were 8,575 tonnes lower at 4,517,475 tonnes and cancelled warrants declined 8,550 tonnes to 2,690,525 tonnes.
Nickel gained $108 to $15,573 despite stocks climbing to a fresh record high of 375,492 tonnes following a 930-tonne increase this morning.
The International Nickel Study Group (INSG) has revised its forecasts for supply and demand on the global nickel market – it now envisages only a marginal supply surplus of 10,000 tonnes this year and sees it swinging to deficit of 20,000 tonnes in 2015 for the first time in five years, Commerzbank said in a note.
“Supply above all continues to fall short of expectations due to the export ban in Indonesia and technical problems in mines elsewhere,” the bank said. “The prospect of a tightened market situation should lend support to nickel prices in the medium term.”
Tin at $19,410 was up $160 – stocks were 25 tonnes higher at 9,180 tonnes and cancelled warrants rose 200 tonnes to 470 tonnes.
In minors, both cobalt and molybdenum prices were neglected, although there was another stock increase in the latter to 144 tonnes, up 12 tonnes.
(Additional reporting by Martin Hayes and Ian Walker, editing by Mark Shaw)