LIVE FUTURES REPORT 07/05: Trade jitters push LME base metals prices lower despite strong volumes; Cu holds below $6,200/t

The three-month copper price fell notably over the morning, dipping more than 1% and now trading below $6,200 per tonne while volumes traded were strong, reaching close to 12,000 lots traded as at 9.40am London time.

While the red metal’s stock picture has improved over the second quarter of the year, on-warrant material remains low at 168,700 tonnes, with more than 35% of stocks held in LME-registered warehouses in the Dutch port of Rotterdam.

“This time around it was [US] President Trump that supplied the unexpected by sending out a stream of tweets threatening China with even more and higher trade tariffs in front of the upcoming trade talks,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning note.

“In recent days the bulk of the selling has come in the afternoon much of which is from the US commodity trading advisor (CTA) sector and further weakness and uncertainty could well trigger more selling today,” he added.

Elsewhere, three-month aluminium futures are following the rest of the complex lower this morning, with price action broadly rangebound below $1,800 per tonne.

This month, more than 150,000 tonnes of aluminium have been delivered into LME-listed warehouses across mostly Asian locations, with the inflows prompting little movement in the metal’s underlying price.

Meanwhile, the light metal’s cash/three-month spread continues to trade in a contango, recently seen at $26 per tonne.

Other highlights

• Elsewhere in macro news, Chinese officials will be travelling to Washington this week to continue trade talks with the US.
• In zinc, nearby tightness continues to limit spot business, with the metal’s LME cash/three-month spread recently trading in a backwardation of $97.90 per tonne. The galvanizing metal’s three-month price currently sits just above $2,700 per tonne.
• Tin futures were the only metal to trade in positive territory over the morning, climbing 1.5% on 200 lots traded as at 10am London time. That said, the metal’s three-month price remains subdued, trading below $19,500 per tonne.
• The economic agenda is light today with Job Openings and Labor Turnover Survey (JOLTS) and IBD/TIPP economic optimism from the US of note.
• Market participants will also be eagerly awaiting any developments from the US-China trade talks scheduled for Wednesday.