LIVE FUTURES 22/10: LME Al price continues to fall; others try to recoup Thursday’s losses

Aluminium’s volumes were by far the highest this morning, with over 11,500 lots traded by 9.30am London time, compared with just 5,145 lots of copper.

Despite closing down by 5% on Thursday, the LME three-month aluminium price continued to edge lower and was back below the $2,900-per-tonne support barrier.

The light metal’s three-month price was recently trading at $2,888 per tonne, down $22.50 per tonne from Thursday’s 5pm close.

“Aluminium was weighed down by falling thermal coal prices. Profit-taking and Chinese government intervention in some of the bulks markets earlier this week sent LME aluminium 5.2% lower yesterday,” Anna Stablum, LME desk at Marex said on Friday morning.

Aluminium premiums have also been dropping with participants in the physical market becoming uneasy about backwardations further down the curve.

Despite the cash/three-month aluminium spread being in a $12.75-per-tonne contango, beyond December the spreads look tighter. The December 2022 to December 2023 spread was most recently in $175-per-tonne backwardation, which has narrowed from $230-per-tonne backwardation earlier this week due to the price drop.

Elsewhere, the rest of the LME base metals had edged higher to recoup some of Thursday’s losses.

The three-month zinc price was up by $21.50 per tonne to $3,451 per tonne this morning, after falling by 3.8% on Thursday, while nickel only managed to recover $170 per tonne this morning after losing over $1,000 per tonne yesterday.

The three-month nickel price was most recently trading at $20,100 per tonne – this after it had hit a high of $21,425 per tonne earlier this week.

“Even though most of the gains made on Wednesday evaporated the following day, we believe that the LME nickel price is merely rebalancing market expectations,” Fastmarkets analyst Andy Farida said.

“LME nickel’s price dynamics are known to trade in extreme swings. The vertical run since trading begin in October is becoming very extended and rather one-sided. We now think the sharp pullback is part of a healthy technical consolidation for nickel,” he added.

Other highlights

• Eyes remain on copper spreads, stocks and price movements after the LME imposed temporary measures to cool the market.
• The three-month copper price was last trading at $9,887 per tonne, up slightly from $9,831.50 per tonne on Thursday afternoon.
• There was a small 2,600-tonne re-warranting and the cash/three-month copper spread was at $208 per tonne backwardation this morning, down from $280 per tonne on Thursday morning and $1,100 per tonne on Monday night.
• Economic data already out on Friday included Japan’s core consumer price index that climbed by 0.1% year on year in September, after being flat in August and the country’s flash manufacturing purchasing managers index (PMI) that climbed to 53 in October, from 51.5 in September.
• Later there is flash PMI data for services and manufacturing out across Europe and the United States, Chinese leading indicators, the US Federal budget balance and a US Treasury currency report.