LIVE FUTURES REPORT 05/02: Nickel up to $17,900/t; zinc set for weekly gain of 3%

Three-month base metals prices on the London Metal Exchange were up across the board on the morning of Friday February 5, led by a 1.4% gain in nickel, with the US Dollar Index easing after reaching a three-month high on Thursday.

Nickel’s three-month price was up to $17,900 per tonne on Friday at 9am, with dip-buying having emerged below the 40 daily moving average, at $17,600 per tonne, a price level it has held since Tuesday.

“Signs of a price base forming around $17,500 per tonne is encouraging for nickel prices to work higher from, particularly amid signs the consolidation phase across the broader base metals complex has run its course,” Fastmarkets analyst James Moore said in a morning note.

“The bullish implications created by the electric-vehicle revolution and the decarbonization agenda will continue to support price sentiment in the longer term,” he added.

Markets have reacted positively to a steadier job market in the United States – the number of people who filed for unemployment benefits in the week to January 29 fell to 779,000, the lowest since November – while hopes for a Covid-19 stimulus package remain, too.

“Banks are revising their US [gross domestic product] expectations for 2021 ever higher, and if realized, 2021 will be the best year for the US economy since the mid-1980s,” Bands Financial founding partner John Browning said in a note this morning.

“However, that is as nothing as to the expectations for China. I quote [Australian bank] Macquarrie: ‘For 1Q21, one should not be surprised to see China’s GDP up over 15% [year on year], industrial production up over 30% and the profits for industrial companies up over 60%’,” he added.

The US Dollar Index eased slightly from the 91.60 it reached during early trading on Friday (after coming to its highest since early December, at 91.54, on Thursday), sitting at 91.34 at 9am, also allowing metal prices to move upward.

Zinc’s price advanced to $2,656 per tonne on Friday morning, having picked up by 3.3% since the start of the week – its closing price on Monday at 5pm was of $2,570.50 per tonne.

Meanwhile, copper’s three-month price was up by 1.1% to $7,912 per tonne from Thursday, while aluminium’s forward price crossed the $2,000-per-tonne barrier for the first time since January 26 – it was at $2,005 per tonne on Friday at 9am, up from Thursday’s closing price of $1,993.50 per tonne.

After an 11,325-tonne outflow on Thursday, there was another 10,200-tonne outflow of aluminium from LME warehouses on Friday, largely leaving ports in Southeast Asia: Port Klang, Malaysia (6,000 tonnes), Johor (1,500 tonnes) and Sinagpore (1,000 tonnes).

Other highlights

  • After unemployment data which came out on Thursday, US data out today includes the Department of Labor’s monthly employment report and data on the trade balance and consumer credit.
  • Data already out today showed that Japan’s leading economic indicators index fell to 94.9% in December, as did German factory orders, by 1.9% month on month, after a rise of 2.7% in November.
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