LIVE FUTURES REPORT 02/10: LME base metals prices soften on dollar advance; Al nears $2,100/t

Base metal prices on the London Metal Exchange were predominantly lower during morning trading on Tuesday October 2, with prices shaken by weaker-than-expected US economic data on Monday while a steady uptick in the dollar index is capping any price rallies.

Edging lower during the morning session, the three-month nickel price shed 0.8% and fell to an intraday low of $12,375 per tonne.

“The falling global inventories, a market deficit and robust underlying demand from the stainless steel industry as well as rising consumption in the production of batteries for electric vehicles should help reduce the selling pressure and potentially help LME nickel prices to eventually recover higher,” Fastmarkets MB analyst Andy Farida said.

Meanwhile, both zinc and lead prices also softened over the morning but remain broadly well-supported, while a strong dollar, trading above 95, continues to stifle commodity investment.

The three-month aluminium price was the only metal to trade positively over the morning, consolidating marginally higher despite more than 175,000 tonnes booked for removal and on-warrant material at its lowest level since 2007.

“With China away on a week-long holiday and continued uncertainty over US sanctions on [Russian aluminium producer] Rusal, we do not expect a major breakout in LME aluminium price just yet. Its technical configuration as well as micro-dynamics have improved a great deal and such a backdrop could now support higher prices in the short term, however,” Farida added.

Similarly, total LME copper stocks continue to drop, with more than 60,000 tonnes freshly canceled since the start of September and around 60% of total stocks now canceled.

As a result, the red metal’s three-month price remains well supported above $6,200 per tonne since the 2018 low of $5,773 per tonne on August 15.

Tightness has also emerged in the LME’s nearby cash/three-month copper spread, now in a backwardation of $8 per tonne, narrowing from a $5-per-tonne contango on October 1.

Fueling positive sentiment across the complex, the newly agreed United States-Mexico-Canada Agreement could help spur an end to global trade tensions, with the trilateral trade pact benefiting US jobs and the country’s automotive industry in particular.

Base metals prices lag; Al finds support

  • The three-month copper price recently traded at $6,241 per tonne, a $9 per tonne fall from Monday’s close. Stocks were down by a net 2,525 tonnes to 196,600 total tonnes, while 11,275 tonnes were freshly canceled at LME-listed warehouses across Asia and North America.
  • Aluminium’s three-month price climbed $9 per tonne to $2,092 per tonne. Inventories dropped by 4,550 tonnes to 983,250 tonnes. Some 8,525 tonnes of material were freshly canceled across Asian warehouses.
  • Nickel’s three-month price recently traded $105 per tonne lower at $12,400 per tonne. Inventories were up by 246 tonnes to 228,456 total tonnes.
  • The three-month zinc price fell $11 per tonne to $2,645 per tonne. Stocks fell by 2,600 tonnes to 199,325 tonnes.
  • Lead’s three-month price recently traded at $2,024 per tonne, down $6.50 per tonne from Monday’s closing price. Inventories were down by 800 tonnes to 114,900 tonnes.
  • The three-month tin price fell $20 per tonne to $18,955 per tonne. Inventories climbed 100 tonnes to 2,965 total tonnes.

Currency moves and data releases

  • The dollar index was up by 0.21% to 95.51.
  • In other commodities, Brent crude oil fell by 0.05% to $84.90 per barrel.
  • In European data this morning, the United Kingdom’s nationwide house price index rose by 0.3% month on month in September, beating an expected increase of 0.2% as well as last month’s 0.5% decline.
  • Elsewhere, Spain’s unemployment change for September showed an increase of 20,400 during the month, which is down significantly from the previous month’s rise of 47,000 and lower than the expected gain of 28,200.
  • Later, Europe is releasing data on its producer price index and the Economic and Financial Affairs Council will be meeting in Brussels to discuss a range of financial issues.
  • In Washington DC today, US President Donald Trump is scheduled to speak about the United States-Canada-Mexico Agreement and US Federal Reserve Governor Randal Quarles is due to testify on the implementation of the Economic Growth, Regulatory Relief, and Consumer Protection before the Senate Banking Committee.
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