LIVE FUTURES REPORT 02/03: LME aluminium spread swings back into contango; more lead deliveries in Antwerp

Aluminium’s benchmark cash/three-month spread swung back into contango for the first time since February 14 this morning – now at $1.75 per tonne contango from $6 per tonne backwardation at the close yesterday.

The backwardation hit a high of $50 per tonne on February 20, the highest in over ten years.

The three-month price dipped $5.50 per tonne this morning compared with Thursday’s close but remains supported from the news that US President Donald Trump will enact a 10% tariff on aluminium imports into the United States.

The three-month lead price dipped further below the $2,500 per tonne level following more stock being delivered into LME-listed warehouses in Antwerp.

Lead stocks were at their lowest since June 2013 on Monday February 26, but 12,375 tonnes was delivered into Antwerp on Wednesday and a further 9,750 tonnes today.

“[Lead] is the underperformer so far this week. LME on-warrant inventory rose 11% to 100,250 tonnes. This is a 30% rise from Monday’s low with on-warrant stocks now back up at levels not seen since November last year,” Marex Spectron noted.

The rest of the complex was range bound and most metals are awaiting further direction. A halt in the dollar’s recovery has stopped any further significant price falls – but the dollar index still remains firmly above 90.00.

The three-month copper price dipped $7 per tonne, while nickel also slipped but remained above $13,400 per tonne.

“The metals have started the day as a mixed bag with light volumes much as yesterday but with the weaker stock markets and the threat, imagined or otherwise, of a trade war between the USA and anyone else who upsets President Trump – this could well trigger another round of fund liquidation which will totally ignore market fundamentals,” Malcolm Freeman, Kingdom Futures said.

Base metals prices

• The three-month copper price dipped $7 to $6,915 per tonne. Inventories declined a net 3,100 tonnes to 324,900 tonnes.
• Aluminium’s three-month price was $5.50 lower at $2,141.50 per tonne. Stocks increased 900 tonnes to 1,323,050 tonnes.
• The three-month nickel price was down $70 to $13,405 per tonne. Inventories declined 1,392 tonnes to 334,116 tonnes.
• Zinc’s three-month price was $19 lower at $3,388 per tonne. Stocks were 1,700 tonnes lower at 131,775 tonnes.
• The three-month lead price dipped $5 to $2,440 per tonne. Inventories increased 9,400 tonnes to 134,625 tonnes.
• Tin’s three-month price was $175 lower at $21,480 per tonne. Stocks were up 50 tonnes to 1,770 tonnes.

Currency moves and data releases

• The dollar index fell 0.07% to 90.17.
• In other commodities, the Brent crude oil spot price was down 0.68% to $63.72 per barrel.
• In US data on Thursday, the manufacturing ISM purchasing managers’ index (PMI) rose to 60.8, while the core PCE index was in line with expectations at 1.5%. Personal income and spending rose 0.4% and 0.2% respectively, both in line with their previous readings.
• The economic agenda is fairly light today with UK construction PMI and revised University of Michigan consumer sentiment and inflation expectations expected.
• In addition, UK Prime Minister Theresa May and Bank of England governor Mark Carney are speaking.