LIVE FUTURES REPORT 02/03: LME nickel drops 1%, tin above $23,500/t

Base metals prices on the London Metal Exchange were in consolidation mode on Tuesday March 2, with tin declining slightly following a near 9% dive on Monday and nickel decreasing by 1%, amid a stronger US Dollar Index, which is at its highest since the first week of February.

The three-month tin price increased to $23,520 per tonne at 9am on Tuesday, following its 8.6% slump at Monday’s close to $23,460 per tonne, its lowest in two weeks.

“There was no particular reason behind tin’s selloff… it was simply a case of a rather ill-liquid market being quite overbought and unable to accommodate some of the length that decided to exit in somewhat of a hurry,” ED&F Man’s head of commodity research Edward Meir said.

The metal’s relative strength index (RSI) indicator, which measures the magnitude of price changes, was down to 32 on Tuesday, showing nearly oversold conditions, while last week’s high was of 95, noting an overvalued price. On February 25, the metal reached $27,500 per tonne.

Nickel’s price, meanwhile, was down by 1% on Tuesday morning to $18,485 per tonne following a 0.6% rise to $18,682 per tonne on Monday at the 5pm close. It touched $20,110 per tonne on February 22.

There was a 7,122-tonne intake of nickel into LME warehouses in Rotterdam on Tuesday, while a further 594 tonnes and 492 tonnes were delivered into Dubai and Busan warehouses respectively.

“After recent strength the base metals are pulling back to consolidate – we have for some time been on the lookout for a pause/pullback, given the metals have already done a lot on the upside, and this now seems to be underway,” Fastmarkets’ head of base metals and battery research William Adams said in a morning note.

“This correction should also let us see how strong underlying demand really is by seeing how far prices pull back and how long they pull back for. In the short term, the stronger US dollar is likely to be a headwind,” he added.

The US Dollar Index was up to 91.32 at 9am on Tuesday, limiting metal prices from moving upward, since a high US dollar makes dollar-denominated commodities, such as base metals, more expensive to purchase.

Meanwhile, the biggest stock moves on the LME on Tuesday were seen in aluminium, with 12,225 tonnes freshly cancelled across warehouses in Port Klang, Malaysia (6,725 tonnes) and Rotterdam (5,500 tonnes), while there was a further 9,675-tonne outflow from LME sheds too.

Aluminium’s cash-to-three month spread was at $16.25 per tonne contango as at 9.30am on Tuesday, widening from $14.50 per tonne at Monday’s close. The light metal’s three-month price edged upward to $2,140.50 per tonne this morning, after registering a Monday 5pm closing price of $2,129.50 per tonne.

Other highlights

  • Economic data out later today includes European Union consumer prices, with US data on economic optimism from the TechnoMetrica Institute of Policy and Politics and total vehicle sales from February.
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