LIVE FUTURES REPORT 06/10: LME base metals dip at close; nickel bucks trend

Base metals prices on the London Metal Exchange mostly closed lower today, Friday October 6, with only nickel bucking the trend.

Copper’s three-month price dipped back below $6,700 today, retreating over $30 per tonne, after it rallied yesterday on news of an earthquake in Chile.

“Copper prices took off in rather stunning fashion on news of a 5.4 magnitude earthquake that hit the Calama region in northern Chile,” said Edward Meir of INTL FC Stone.

“Although the quake did no damage to key copper facilities, the rally stayed in place for much of the day and we are seeing only a mild retracement over today’s session,” he added.

The latest employment report showed a drop in US employment figures for the first time in six years, placing pressure on base metals prices.

Zinc and lead prices both dropped around $50 per tonne while aluminium fell $18.50 per tonne as a result of the dollar index remaining in a strong position – it hit highs of 94.27 today, the highest since July 2017. Tin prices plummeted over $400 per tonne.

Nickel was the only base metal to buck the trend, climbing $65 per tonne higher. The Philippines’ Commission on Appointments (CA) confirmed Roy Cimatu as the head of the country’s Department of Environment and Natural Resources earlier this week.

The focus is now on how the former army general will tackle outstanding mining issues in the country, including the recent push by lawmakers to ban the export of unprocessed ores and the mine closures ordered by his predecessor, Regina Lopez, earlier this year.

Chinese market participants will return to the market on Monday following Golden Week National Holidays.

Copper retreats

  • The three-month copper price was down $33.50 to $6,666.50 per tonne.
  • Stocks declined a net 2,625 tonnes to 293,460 tonnes, with 1,750 tonnes freshly cancelled.
  • Yesterday, copper prices initially rallied on news of an earthquake in Chile, although early reports suggested damage was minimal to copper assets.
  • Chilean copper producers Codelco and Antofagasta reported no damage to their operations. The two miners have facilities close to the city of Calama, where the earthquake occurred.
  • The global refined copper market recorded a deficit of 70,000 tonnes in June, pushing the supply/demand balance to a deficit of 75,500 tonnes between January and June 2017, the International Copper Study Group estimates.
  • In January-June 2016, the refined market recorded an even larger deficit of 405,000 tonnes.
  • “We remain bullish for copper’s fundamentals but prices have started to look overstretched as they approach $7,000 per tonne. They have since corrected on the back of some profit-taking, but the dip has been well supported. The stock rise and wider spreads of late, also suggests plentiful availability so there should be little need for buyers to chase prices higher, although they seem to be doing just that. We wait to see how China reacts to the stronger prices when they return on Monday,” William Adams, Metal Bulletin senior analyst, said.

Base metals prices

  • The three-month aluminium price was down $18.50 to $2,153 per tonne. Stocks declined 2,475 tonnes to 1,246,875 tonnes, with 2,100 tonnes freshly cancelled.
  • Nickel’s three-month price was up $65 to $10,600 per tonne. Inventories dipped 720 tonnes to 386,502 tonnes.
  • The three-month zinc price was $53 lower at $3,235 per tonne. Stocks declined 375 tonnes to 250,700 tonnes.
  • Lead’s three-month price dipped $59 to $2,533 per tonne. Inventories fell 400 tonnes to 155,125 tonnes
  • The three-month tin price was $400 lower at $20,550 per tonne. Stocks were unchanged at 1,970 tonnes.

Currency moves and data releases

  • The dollar index most recently dipped 0.04% to 93.87.
  • In other commodities, the Brent crude oil spot price was down 2.60% to $55.48 per barrel.
  • During September, 33,000 Americans exited the labour force for the first time in six years, which was a big miss from the 82,000 new jobs forecast. Still, average hourly earnings ticked up 0.5% and the headline unemployment rate fell to 4.2%.
  • Analysts attribute the decline to Hurricane Harvey, which devastated the Houston metro area and forced thousands out of work.
  • Later today, US Federal Open Market Committee members William Dudley and Robert Kaplan are speaking.
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