LIVE FUTURES REPORT 05/12: LME zinc price fails to hold gains in 1.3% dip, turnover tops complex

Zinc’s outright price fell to an intra-morning low of $2,217.50 per tonne, a loss of 1.3% against Wednesday’s closing price of $2,246 per tonne.

At just under 2,500 lots exchanged as at 9.10am London time, zinc’s volume on the exchange topped the complex, with copper’s 2,300 lots a close second.

Meanwhile, forward spreads in LME zinc remain in a cash premium, with the metal’s benchmark cash/three-month spread recently seen in a $13-per-tonne backwardation.

Despite forward spreads in LME zinc trading in a backwardation since mid-September, fresh inflows of zinc have failed enter LME warehouses consistently.

“LME stocks have begun to trend lower following recent inflows; they totaled 59,075 tonnes on Wednesday. Nearby spreads have eased somewhat, which may prevent further inflows in the short term,” Fastmarkets analyst James Moore said in his Zinc Today report.

“The cash/three-month spread was most recently in a backwardation of $13 per tonne, down from $26.50 per tonne on November 29, reflecting recent selling pressure. Fresh cancelations remain supportive and suggests already low levels of global inventories will face further pressure,” he added.

LME on-warrant zinc stocks remain close to their lowest levels in a decade at 43,925 tonnes, with some 15,625 tonnes now stored in LME-registered warehouses in Kaohsiung, Taiwan.

Other highlights

• Elsewhere in the complex, the three-month copper price continues to edge closer to nearby resistance at the $5,900-per-tonne level, climbing by 0.3% over the morning.
• Meanwhile, LME aluminium stocks were subject to a fresh inflow of some 13,650 tonnes this morning, with price action edging lower by just 0.2%.
• Nickel’s outright price remains in a downtrend, and is now edging closer to the $13,000-per-tonne support level, while continued stock outflows and fresh cancelations have failed to bolster the metal’s underlying price.
• In other commodities, Brent crude oil futures climbed by 0.25% this morning, recently trading at $63.18 per barrel.
• In European data this morning, German factory orders fell by 0.4% month on month in October, coming in below the expected 0.3% increase and the previous 1.5% rise.
• Later, the European Union will release figures on its revised gross domestic product on a quarter on quarter basis, while the United States is set to also release factory orders, in addition to unemployment claims and its trade balance.