LIVE FUTURES REPORT 04/05: LME zinc price at 8-mth low; aluminium, nickel stay firm

Base metals prices on the London Metal Exchange were mostly up during morning trading on Friday May 4, with zinc and tin prices bucking the general strength.

Zinc’s three-month price continued to trade below $3,000 per tonne – levels last seen in August 2017.

The metal’s downward trend reached a low of $2,972 per tonne in the morning session, with 4,962 lots traded as at 10 am London time - the highest across the complex.

Zinc’s price sentiment remains shaken after more than 60,000 tonnes of the metal was shipped to Antwerp’s LME-listed warehouse last week.

“We could be seeing a delayed reaction to last week’s deliveries into Antwerp. The metal’s chart picture seems bearish, and if key support levels are broken, we could see a flurry of downward movement for zinc,” Robin Bhar, head of metals research at Socgen, told Metal Bulletin.

Aluminium’s three-month price maintained broad strength over the morning, climbing back over the $2,300-per-tonne mark despite heightened volatility throughout April.

The light metal’s cash/three-month spread is currently in a backwardation of $1 per tonne, compared with a $1 per tonne contango on Monday.

“Metals have been weaker with Chinese selling in the last few days. Trade tension worries are still there even with the US and China currently talking. The dollar has been much stronger, and all of those factors see metals under a bit of pressure,” Bhar added.

“I would think prices should hold around here, we could see them drop a bit lower, but I don’t think they’ll stay down for too long,” he concluded.

Elsewhere in the complex, nickel’s three-month price is steadily consolidating around $14,000 per tonne.

Nickel prices experienced a downward spike towards $13,500 per tonne after a sizeable inflow of more than 11,000 tonnes – the largest single delivery this year – was shipped into Singapore’s LME-listed warehouse.

Copper’s three-month price continues to find support while geopolitical tensions soften, consolidating around the $6,800-per-tonne mark.

The red metal’s bullish outlook is continuing to support upward swings towards $7,000 per tonne.

Talks between the United States and China are currently underway, with key cabinet members travelling to Beijing in hopes of resolving trade disputes.

Tin’s three-month price is keeping steady above $21,200 per tonne.

Export worries over the Indonesian government’s decision to suspend the issuing of new export licenses continue to hinder any significant upward swings.

The metal’s cash/three-month spread is in a backwardation of $136 per tonne, moving back from $121 per tonne at Thursday’s close.

Base metals mostly higher; zinc, tin drop

  • The three-month copper price climbed $23 to $6,850 per tonne. Stocks fell a net 5,025 tonnes to 311,375 tonnes.
  • Aluminium’s three-month price rose $35 higher at $2,304 per tonne. Inventories dipped by 8,650 tonnes to 1,310,650 tonnes.
  • The three-month nickel price is trading at $13,920 per tonne, up $145. Stocks were down 834 tonne to 314,862 tonnes.
  • Zinc’s three-month price dropped $10 to $2,997 per tonne. Inventories dipped by 300 tonnes to 236,475 tonnes.
  • The three-month lead price increased $13 to $2,273 per tonne. Stocks were down 50 tonnes at 131,600 tonnes.
  • Tin’s three-month price dipped $10 lower at $21,200 per tonne. Inventories were down 25 tonnes to 2,200 tonnes.

Currency moves and data releases

  • The dollar index was up by 0.1% at 92.54.
  • In other commodities, Brent crude oil was down by 0.49% at $73.30 per barrel.
  • In US data on Thursday, ISM non-manufacturing PMI for April disappointed at 56.8, likewise for preliminary unit labor costs at 2.7%. Other data surprised on the upside, including first quarter preliminary non-farm productivity at 0.7%, weekly unemployment claims at 211,000, March factory orders at 1.6%, the March trade balance at -$49 billion and April final services PMI at 54.6.
  • In US data later today, we have the official non-farm employment report.
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