LIVE FUTURES REPORT 02/12: LME base metal prices down despite better-than-expected China data

London Metal Exchange three-month base metals prices were somewhat subdued during morning trading on Monday December 2 while a strong US dollar index, trading up by 0.08% at 98.35 at the same time, had a dampening effect on trading volumes.

This despite the release of better-than-expected data from China this morning that showed the country’s manufacturing sector was in expansionary territory in November. China’s Caixin purchasing managers’ index (PMI) came in at 51.8 last month, up marginally from 51.7 previously.

This followed Saturday’s release of the official Chinese manufacturing PMI that rose to 50.2 in November from 49.3 previously.

But the data failed to offer much support to the base metals while markets remained overshadowed by ongoing trade tensions between China and the United States.

“So far this morning’s market moves suggest that the data has done little to stimulate the market where prices are all but unchanged from Friday’s closes and the volumes so far are tiny,” Kingdom Futures chief executive officer Malcolm Freeman said in a morning note.

“The weekend and today saw the release of Chinese and the number beat expectations,” Freeman said. “However on the trade-talk front there has been no activity as the supposed time to sign the phase one of the agreement approaches.”

The LME three-month nickel price continues to come under pressure while long position holders liquidate stocks and new shorts enter the market.

This continues to drive the price lower; the LME three-month nickel price was down by 0.4% at around $13,610 per tonne this morning and participants are not confident of a price correction to the upside any time soon.

LME nickel stocks remain on a general downtrend, down by 59% at 69,036 tonnes this morning from 166,680 tonnes on September 1, but a 1,122-tonne inflow at 9am London time versus 366 tonnes of outflow was another unsupportive development for prices.

The LME three-month aluminium price continues to fluctuate in a narrow range, down by 0.9% at $1,752.50 per tonne from Friday close, ignoring continual stock inflows – a 5,700-tonne inflow as of 9am this morning was tempered by a 4,050-tonne inflow, leaving total LME aluminum stocks at 1,273,300 tonnes.

LME aluminium spreads remain in backwardation, unmoved by inflows of material. The December-to-January spread is trading in a marginally wider $16.25-per-tonne backwardation from $16 per tonne on Friday, while the benchmark cash/three-month spread backwardation remains unchanged at $22 per tonne today from Friday.

Other highlights

  • In data on Monday, manufacturing PMIs across Europe and the US will be released.
  • In addition, European Central Bank president Christine Lagarde will speak today.
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