LIVE FUTURES REPORT 06/10: Base metals prices mostly upbeat; copper, zinc in the driving seat

The LME three-month copper contract traded at $6,713.50 per tonne as of 03:14 BST, up $13.50 from Thursday’s close, with 315 lots changing hands.

With Chinese markets, including the Shanghai Futures Exchange, closed for the country’s National Day Golden Week holiday (October 2-6), trading has been subdued on the Asian front.

“The red metal rallied on news that an earthquake in Chile could disrupt supply. While the impact looks minimal to copper assets, it triggered some short covering as it broke through some key technical levels,” ANZ Research said on Friday.

Zinc prices also continued their climb this morning, finding support amid tight stock levels.

Available stocks of zinc in LME warehouses currently stand at 113,475 tonnes; they have ranged between 69,850 and 317,000 tonnes so far this year.

“Looking ahead at the October date – October 18 – there are two large short positions with one entity holding 30-39% and another holding 10-19% of the October date open interest, which stands at 19,322 lots, some 483,050 tonnes,” Metal Bulletin analyst William Adams said.

In other news related to the zinc market, China’s crackdown on pollution has prevented over 1,000 zinc mines across the country from ramping up production, stopping miners from cashing in on the metal’s recent price rally.

China’s mined zinc output declined 7.4% or 185,100 tonnes year on year to 2.33 million tonnes in the first half of 2017, according to World Bureau of Metal Statistics.

Base metals prices

• The LME three-month zinc contract rose $11.50 to $3,299.50 per tonne.
• The LME three-month aluminium contract price edged down $0.50 to $2,171 per tonne.
• The LME three-month lead contract price slipped $7.50 to $2,584.50 per tonne.
• The LME three-month nickel contract price climbed $120 to $10,655 per tonne
• The LME three-month tin contract price dipped $15 to $20,935 per tonne.

Currency moves and data releases

• The dollar index was down 0.01% to 93.91 as of 02:46 BST after reaching as high as 94.01 on Thursday – its strongest level since August 17 when it traded at 93.96.
• Kathy Lien, managing director of FX strategy for BK Asset Management, noted that the latest string of positive US economic reports including jobless claims falling, the trade deficit narrowing and the amount of factory orders increasing lent support to the dollar.
• In other commodities, the Brent crude oil spot price fell 0.15% to $55.96 per barrel as of 03:00 BST. The dip in oil prices is primarily due to a recovery in US crude exports and falling European refining margins; both of which are major factors undermining the Organisation of Petroleum Exporting Countries efforts to curtail production.
• In Europe, both the pan-European Stoxx 60 and IBEX 35 posted gains after news emerged that Spain’s Constitutional Court has suspended a session of the Catalan Parliament due to take place Monday.
• In US data on Thursday, weekly unemployment claims came in at 260,000, just below the forecast of 270,000.
• In today’s economic agenda, focus will be on US employment data with average hourly earnings, the non-farm employment change and unemployment figures due.
• In addition, US Federal Open Market Committee members William Dudley and Robert Kaplan are speaking.