LIVE FUTURES REPORT 04/10: LME base metals prices rebound on positive US data; Al boosted by Alunorte suspension

Three-month base metals prices on the London Metal Exchange were broadly up during early trading on Thursday October 4 following the release of positive economic data from the United States overnight.

The base metals, barring tin, reacted positively to the strong US economic releases, with the country’s final services purchasing managers’ index (PMI) for September coming in at 53.5 and exceeding the forecast and previous figure of 52.9.

A reading above 50 indicates expansion, while below 50 contraction.

Likewise, the Institute for Supply Management’s non-manufacturing PMI for last month was also higher than expected at 61.6, compared with 58.5 in August.

“The measure of business activity is at the highest level since January 2004,” ANZ Research noted on Thursday.

Leading the complex higher was aluminium, with the light metal’s three-month price on the LME up by 1.3% to $2,235 per tonne at 2am London time. The price had earlier reached a high of $2,246 per tonne.

Aluminium has found additional support from the announcement that Norsk Hydro has fully suspended operations at its Alunnorte alumina refinery in Brazil, with the expectation of tightening alumina supply a tailwind for aluminium prices.

The news came somewhat as a surprise to the market, with Hydro just recently announcing that it was close to resuming full operations after it signed agreements with local Brazilian authorities last month, ending an environmental dispute that had resulted in production cuts since March.

Elsewhere, the three-month nickel and lead prices both rose by 0.8%.

Fastmarkets MB Research analyst Andy Farida noted that the steady decline in global lead inventory stocks, as well as the persistent market deficits are positive elements that could work in favor of the current rebound.

“Unlike sister-metal zinc, global mine output of lead ores and concentrates are running at a lower rate,” Farida said.

The three-month zinc price increased by 0.4%, while copper climbed 0.6%. Tin has, so far, not yet traded.

All base metal prices up

  • The three-month copper price rose $36.50 per tonne to $6,303.50 per tonne
  • The three-month aluminium price jumped $29 per tonne to $2,235 per tonne.
  • The three-month zinc price climbed $11 per tonne to $2,661 per tonne.
  • The three-month lead price went up $16 per tonne to $2,036 per tonne.
  • The three-month nickel price increased $105 per tonne to $12,875 per tonne.
  • Three-month tin was untraded.
  • Currency moves and data releases
  • The dollar index was relatively unchanged at 95.99 as at 9am Shanghai time.
  • In other commodities, the Brent crude oil spot price was at $85.86 per barrel as at 9am Shanghai time.
  • In European data Wednesday, both Italian and French September PMI readings exceeded expectations at 53.3 and 54.8 respectively, while Spain’s PMI ticked lower at 52.5.
  • Germany’s PMI for the September period dropped to 55.9 from both a forecasted and previous figure of 56.6, while Europe’s final services PMI came in flat across the board at 54.7.
  • Today, Spain and France are releasing data on their 10-year bond auction, while the UK reports on its housing equity withdrawal.
  • In US data on Wednesday, the final services PMI for the September period came in at 53.5, exceeding both the forecast and previous figure of 52.9. The ISM non-manufacturing PMI for the same period was higher than expected at 61.6, up from the August figure of 58.5.
  • On Thursday, the US is expected to publish data on its challenger job cuts, unemployment claims, factory orders, and natural gas storage.
  • Several public engagements are also scheduled for today: US Federal Reserve Chair Jerome Powell is participating in a panel discussion at The Atlantic Festival in Washington DC, Federal Reserve Governor Lael Brainard is due to speak about the payment system at the FedPayments Improvement Community Firm in Chicago, while Federal Reserve Bank of Cleveland President Loretta Mester and Federal Reserve Governor Randal Quarles will both be at the “Community Banking in the 21st Century Conference” at the Federal Reserve Bank of St. Louis to deliver opening remarks and speak about trends in community banks respectively.
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