LIVE FUTURES REPORT 06/10: LME copper price continues upward charge; zinc, Al consolidate

The base metals prices on the London Metal Exchange were mostly higher this morning, Friday October 6, as copper continued to climb higher.

The three-month copper price continues to consolidate above $6,700 per tonne this morning following its 2.7% rally yesterday.

“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 began to consolidate at current levels, edging just $1.50 per tonne higher, finding support amid tight stock levels. Available stocks of zinc in LME-approved warehouses currently stand at 113,675 tonnes; they have ranged between 69,850 and 317,000 tonnes so far this year.

The three-month nickel price rebounded $120 per tonne higher while tin and aluminium also recorded minimal gains but the upside was capped by a strengthening dollar. Lead was the only base metal to be trading in negative territory this morning.

Base metals have experienced little price fluctuation throughout the week, with Chinese market participants sidelined due to an extended national holiday. The market awaits their return on Monday.

“There has been some producer selling on some of the metals evident but this is only to be expected on such price gains. Moreover with China back Monday, no doubt there will be some type of mean reversion but overall the prices look set to make further gains with risk of further pain for shorts across the front end,” Marex Spectron said in a note.

Copper prices bounced higher

  • The three-month copper price was up $7.50 to $6,707.50 per tonne.
  • Stocks declined a net 2,625 tonnes to 293,460 tonnes, with 1,750 tonnes freshly cancelled.
  • 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 works close to the city of Calama, where the earthquake occurred.
  • “There has been no impact to our operations,” Codelco’s spokeswoman told Metal Bulletin yesterday.
  • 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 in January-June 2017, the International Copper Study Group estimates.
  • In January-June 2016, the refined market recorded an even larger deficit of 405,000 tonnes.

Base metals prices

  • The three-month aluminium price was up $12 to $2,159.50 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 $120 to $10,655 per tonne. Inventories dipped 720 tonnes to 386,502 tonnes.
  • The three-month zinc price was $1.50 higher at $3,289.50 per tonne. Stocks declined 375 tonnes to 250,700 tonnes.
  • Lead’s three-month price was $21.50 lower at $2,570.0 per tonne. Inventories fell 400 tonnes to 155,125 tonnes
  • The three-month tin price was $80 higher at $21,030 per tonne. Stocks were unchanged at 1,970 tonnes.

Currency moves and data releases

  • The dollar index was up 0.16% to 94.05 – its strongest level since August 17 when it peaked at 94.15.
  • 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 was up 0.11% to $57.02 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 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.
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