LIVE FUTURES REPORT 02/08: LME copper price sells off 1% in downtrend; zinc slides below $2,400/t

The three-month copper price on the London Metal Exchange was down during morning trading on Friday August 2, falling to its lowest level since June 10, while zinc futures shed 1.4% of Thursday’s gains.

Copper futures were recently trading just over $5,800 per tonne this morning, falling by more than 3% from levels seen last week, when copper’s three-month price was trading above $6,000 per tonne.

Volumes traded in the red metal were high over the morning, topping the complex with just over 8,400 lots traded as at 9.30am London time, while zinc’s 3,400 lots puts it as the second most-traded metal.

Meanwhile, physical traders are primed to benefit from positive forward spreads in copper and zinc, with both metals’ benchmark cash/three-month spreads trading in contangos of $22 per tonne and $7 per tonne respectively.

“[Thursday] saw the metals slide lower once more as economic data showed a further slowing of the US and European economies,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning note on Friday.

“This afternoon there is a mass of US economic data with the key non-farm payrolls, manufacturing payrolls, durable goods orders and trade balance figures, and if these numbers also show a slowdown, the Dow Jones Industrial Average could well come under further pressure and that would inevitably take the metals down along with it,” he added.

Meanwhile, three-month zinc futures slipped to an intra-morning low of $2,361 per tonne, with price action continuing to edge lower despite a persistent drawdown in LME stocks.

Total LME zinc stocks now sit at 78,500 tonnes, with some 50,800 tonnes on-warrant. Zinc stocks were at 129,000 tonnes at the start of the year, while deliverable material at the time was around 117,000 tonnes.

In macro news, fresh tariff threats from US president Donald Trump last night has prompted further risk-aversion in commodity investment, with the president pledging further US-imposed tariffs of 10% on $300 billion of goods and products coming from China.

Other highlights

  • The US dollar index was lower over the morning, down by 0.17% at 98.27.
  • In other commodities, Brent crude oil futures were trading 1.57% higher over the morning, recently trading at $61.96 per barrel.
  • In data on Thursday, the UK’s manufacturing purchasing managers’ index (PMI) for the July period remained in contraction territory, holding unchanged at 48.
  • Meanwhile, the UK’s Monetary Policy Committee (MPC) official bank rate votes held steady, with all nine members voting to hold interest rates. Additionally, the official bank rate for the June-July period was also unchanged at 0.75%.
  • From the US on Thursday, the ISM manufacturing PMI for the July period was slightly lower at 51.2, but still in expansionary territory.
  • US data on Friday includes the July jobs report, factory orders and a revised reading from the University of Michigan that is expected to confirm the small acceleration in consumer sentiment during July.
  • The main focus, however, will be the all-important non-farm payrolls release, which is forecast to show the US added 164,000 non-farm payrolls last month, after adding 224,000 jobs in June.
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