LIVE FUTURES REPORT 06/09: LME nickel price consolidates lower following fresh inflow; copper holds above $5,800/t

The three-month nickel price on the London Metal Exchange was lower during morning trading on Friday September 6, with upward momentum tempered by a fresh inflow of some 1,100 tonnes, while copper futures continued to find support above the $5,800-per-tonne support level.

Recently trading at around $17,405 per tonne, nickel futures remain in a downtrend after news of an expedited Indonesian ore ban took the commodity to its highest level since 2014 on Monday at $18,850 per tonne.

With buying activity now simmering, turnover was moderate in nickel over the morning, with some 4,400 lots having exchanged hands as at 9.30am London time, behind copper’s 4,800 lots.

Yet against volatile price action in nickel, the metal’s forward curve remains tight, with nickel’s benchmark cash/three-month spread recently trading in a $17-per-tonne backwardation, but narrowing from its widest backwardation in more than 12 years last week at $143 per tonne.

As a result of the spread tightness, a fresh inflow of 1,182 tonnes was delivered into LME-registered warehouses predominantly in Europe, largely due to carry and financing costs being higher in a backwardation market.

Despite this, on-warrant nickel stocks remain at their lowest level since December 2011 at 85,602 tonnes.

“It is undeniable that there is ample physical nickel available in the entire global system, and in addition the Indonesian government turned its sights on the constructors of new production plants for being behind schedule, as they obviously want to be able to fill the gap in ore exports with nickel pig iron (NPI) produced at home,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning report.

“Nickel has recently proved that you should not turn your back on it however, and with minimal LME stock levels and people starting to think this rally is all over could be when the market is at its most dangerous,” he added.

Elsewhere in the complex, three-month copper futures were also slightly lower over the morning, but held gains above the $5,800-per-tonne support level.

In contrast to nickel, copper outflows totaling some 6,100 tonnes were booked out of mixed locations this morning, with some 2,900 tonnes booked out of LME-registered Rotterdam warehouses, some 1,250 tonnes out of Kaohsiung, around 800 tonnes out of Busan and 350 tonnes out of Trieste.

Despite this, total LME copper stocks remain high at 313,275 tonnes, with some 207,350 tonnes on-warrant.

Other highlights

  • The dollar index was higher over the morning, climbing by 0.01% to 98.40.
  • In other commodities, Brent crude oil futures were up by 0.33% over the morning, climbing to $60.94 per barrel.
  • In data from the European Union this morning, German industrial production month on month for the August period was down by 0.6%, missing an expected rise of 0.4%.
  • Later, the US will be releasing data on its average hourly earnings, non-farm employment change and unemployment rate.
  • In addition, US Federal Reserve chairman Jerome Powell is due to speak at the Swiss Institute of International Studies in Zurich.
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