LIVE FUTURES REPORT 03/10: Metals track higher on LME; zinc sets fresh 10-year peak

Base metals gradually moved higher during European pre-market trading on Tuesday October 3, with trend-setter zinc again notching up its highest price for ten years, as the robust dollar gave back some Asian-hours gains, traders said.

London Metal Exchange zinc prices continued to derive support from tight supply and the persistently large backwardations in spreads, peaking at $3,267.50 per tonne.

Otherwise, with Chinese markets, including the Shanghai Futures Exchange, closed for the country’s National Golden Week holiday (October 2-6), trading was mostly routine.

“The base metals are a mixture of strength, weakness and consolidation,” senior analyst at Metal Bulletin William Adams said.

However, profit-taking is being absorbed, with the technical tightness in some metals discouraging significant short-selling.

“We are now moving further into the post-summer period when business activity should pick up, so we wait to see if buying picks up again – for now the stronger dollar is unlikely to be helping,” Adams added.

The dollar, already seeing support from expectations of a US interest rate rise in December, was underpinned by the release of strong US economic data on Monday – notably the ISM manufacturing purchasing managers’ index (PMI) for September.

Zinc probes higher again

  • The three-month zinc price was trading recently at $3,266 per tonne, up $30 from the Monday open-outcry close. There was a further decline in warehouse stocks, with a net 1,025-tonne fall to 252,225 tonnes seen – cancelled warrants held at 139,025 tonnes.
  • The benchmark cash/threes spread was little-changed at $35/38 backwardation.

Copper back above $6,500 per tonne, others match trend

  • Copper, initially drifting in Asia, reversed direction and moved back above the $6,500 per tonne level with the three-month price at $6,517, up $24 from Monday. Business was light, however, with just some 2,880 lots trading on Select by mid-morning.
  • Warehouse stocks were up 6,550 tonnes at 302,050 tonnes, with 6,675 tonnes warranted in Gwangyang.
  • The three-month aluminium price traded at $2,124 per tonne, up $23, with inventories falling 3,550 tonnes to 1,225,475 tonnes.
  • The three-month lead price took its cue from zinc’s strength, and rose to $2,527 per tonne, up $9. Stocks were down 575 tonnes at 156,900 tonnes. The cash/threes spread was around level.
  • The three-month nickel price gained $305 to $10,695 per tonne, with stocks declining 1,782 tonnes to 382,734 tonnes.
  • The three-month tin price was just $25 higher at $20,700 – inventories fell 25 tonnes to 2,045 tonnes.

Currency moves and data releases

  • The dollar index was steady at 93.65, having earlier hit 93.92, which was the highest since August 17.
  • In other commodities, the Brent crude oil spot price was seven cents higher at $56.09 per barrel.
  • The economic agenda is lighter today – Europe’s August producer price index rose 0.3% against a forecast 0.1% increase.
  • Later, US Federal Open Market Committee member Jerome Powell is speaking in Washington DC, USA.
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