LIVE FUTURES REPORT 02/02: LME nickel prices retreat again; lead’s bullish Q1 continues

Nickel prices on the London Metal Exchange have once again failed to hold on to recent gains, with the three-month price retreating nearly $200 per tonne during morning trading on Friday February 2.

On Thursday, the three-month nickel on the LME ended ring trading at $14,000 per tonne for the first time since May 2015. But nickel’s price volatility has been highlighted once again after it hit a low of $13,775 per tonne already this morning.

“Nickel refuses to lie down with every and any dip representing a buying opportunity… causing market makers some headaches as they sell the lows and buy the highs,” Marex Spectron noted.

The metal is now up by nearly 13% since the start of the year. Another base metal which has had a strong start to the year is lead, now up by 5.8% since January 2 and continuing to set new 2018 highs daily.

Supply is said to have tightened in recent weeks amid lower operating rates among Chinese lead miners and smelters in winter due to the strict environmental inspections aimed at curbing pollution during the period.

In addition, elevated demand due to the upcoming Chinese New Year holidays (February 15-21) has also lent support to prices.

“Users of lead ingots have bought more material in recent weeks to stock up before the holiday period,” a lead trader said.

The metal is pushing close to the $2,700-per-tonne boundary which was last breached in July 2011.

Other base metals were little moved this morning, with copper and aluminium edging slightly higher but continuing to lack significant direction.

“The markets have also become rather thin and volatile as the Chinese New Year approaches and in addition to that there is next Wednesdays option declarations. The economic data out yesterday did not hold any major surprises on key numbers,” Malcolm Freeman of Kingdom Futures said.

“Aluminium’s sudden fall to $2188.5 [per tonne] yesterday shows how these prices can suddenly tumble into a vacuum when the markets are not backed up by physical demand and higher premiums,” he added.

Base metals prices

  • The three-month copper price was up $7.50 to $7,126.50 per tonne. Stocks dipped 350 tonnes to 304,325 tonnes.
  • Aluminium’s three-month price increased $4.50 to $2,229.50 per tonne. Inventories declined 2,900 tonnes to 1,077,650 tonnes.
  • The three-month nickel price dropped $190 to $13,810 per tonne. Stocks were down 1,674 tonnes to 353,592 tonnes.
  • Zinc’s three-month price was most recently trading at $3,533.50 per tonne, a decline of $23.50. Inventories fell 1,900 tonnes to 168,800 tonnes.
  • The three-month lead price was up $2 to $2,667 per tonne. Stocks dipped 925 tonnes to 132,325 tonnes.
  • Tin’s three-month price increased $135 to $21,535 per tonne. Inventories declined 25 tonnes to 1,930 tonnes with 215 tonnes freshly cancelled.

Currency moves and data releases

  • The dollar index was up 0.30% to 88.88 - the recent low was 88.43 on January 25.
  • In other commodities, the Brent crude oil spot price was down 0.23% to $69.55 per barrel.
  • Today, we have UK construction PMI, EU producer prices and a raft of US data that includes average hourly earnings, non-farm employment change, unemployment rate, revised University of Michigan consumer sentiment and inflation expectations and monthly factory orders.
  • In addition, US Federal Open Market Committee member John Williams is speaking.
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