LIVE FUTURES REPORT 02/10: LME zinc, lead prices strong on tight supply; copper rebounds

The three-month zinc price was most recently trading at $3,167 per tonne as tight supply continued to support prices following 16,950 tonnes freshly cancelled this morning, with the majority in Antwerp.

Both zinc and lead spreads are now in backwardation with zinc’s cash/three-month spread at $42.50 per tonne and lead’s at $4 per tonne backwardation.

“The base metals are looking mixed; lead and zinc are the ones looking the strongest, copper and nickel prices started to rebound, but seem to lack energy, tin is holding up in high ground, but also lacks energy, while aluminium prices are under downward pressure,” said William Adams, Metal Bulletin senior analyst.

“With lead, zinc and tin cash/three-month spreads backwardated, tightness is likely to underpin prices, while large contangoes in copper and nickel suggest profit-taking and/or increased availability,” he added.

The three-month copper price was trading higher and is back at the $6,500-per-tonne mark while tin prices rose $50 as stocks remained unchanged for the sixth consecutive trading day.

Chinese markets are closed for the country’s National Day Golden Week holiday.

Copper prices bounce higher

• The three-month copper price was up $19 to $6,500 per tonne.
• Stocks declined 1,750 tonnes to 295,500 tonnes.
• All base metal stocks in the Shanghai-bonded area fell during September due to favourable arbitrage, with copper stocks hitting their lowest since February this year, zinc at a 1.5-year low and nickel refreshing its two-year low.
• Meanwhile, China is already enforcing some restrictions on copper imports, cutting quotas and limiting the number of licences in some regions of the country, sources told Metal Bulletin, although a full ban on scrap copper imports has not yet been confirmed.
• Chile’s Escondida copper mine reported a 91% year-on-year decline in net profit for the first half of 2017, which it attributed largely to a 44-day strike at the operation in this year’s first quarter, the company said on September 28.

Base metals prices

• The three-month aluminium price dipped $15.50 to $2,086.50 per tonne. Stocks declined 9,675 tonnes to 1,259,025 tonnes.
• Nickel’s three-month price dipped $85 to $10,415 per tonne. Inventories increased 2,574 tonnes to 384,516 tonnes.
• The three-month zinc price was up $5 to $3,167 per tonne. Stocks declined 2,150 tonnes to 253,250 tonnes, with 16,950 tonnes freshly cancelled.
• Lead’s three-month price increased $9 to $2,494 per tonne. Inventories dipped 75 tonnes to 157,475 tonnes.
• The three-month tin price was up $50 to $20,725 per tonne. Stocks were unchanged at 2,070 tonnes.

Currency moves and data releases

• The dollar index was up 0.51% to 93.55. It has eased slightly after reaching as high as 93.67 on September 28, the highest since August 18.
• In other commodities, the Brent crude oil spot price fell 0.04% to $56.65 per barrel.
• China’s central bank said on Saturday that it would cut the reserve requirement ratio –which is the amount of cash that some banks must hold as reserves – for the first time since February 2016 so as to encourage lending to small business and the agricultural sector.
• In data released on Saturday, China’s official manufacturing purchasing managers’ index (PMI) for September came in at 52.4, above forecast of 51.5 and August’s reading of 51.7 – the September print was the highest since April 2012.
• “With news that some parts of heavier-polluting Chinese industry will be curtailed from this month…the official Manufacturing PMI – and the non-manufacturing PMI for that matter – released over the weekend revealed no such net impact,” National Australia Bank said on Monday.
• Economic data due later today includes final manufacturing PMI, ISM manufacturing PMI, construction spending, ISM manufacturing prices from the USA and manufacturing PMI from the UK.