LIVE FUTURES REPORT 08/06: Fresh cancellation allows LME tin price to climb 1.4%; lead under pressure

The three-month tin price on the London Metal Exchange was higher during morning trading on Monday June 8, with price action bolstered by a fresh cancellation of 220 tonnes, while continued volatility in the LME lead price saw selling pressure emerge over the morning.

Tin’s outright price on the LME was recently seen at $16,595 per tonne, up from Friday’s closing price of $16,550 per tonne, while turnover was moderate at 75 lots exchanged as at 9.45am London time.

This morning’s fresh cancellation saw the drawdown in LME tin stocks continue, with 220 tonnes freshly booked out of LME-registered warehouses in Los Angeles and Port Klang, while total on-warrant LME tin stocks now stand at just 1,375 tonnes.

Against a continued crimp in exchange stocks, however, LME tin’s forward curve remains in strong backwardation, with the metal’s benchmark cash/three-month spread recently trading at $216 per tonne backwardation.

“China’s trade figures showed a slowdown in exports in May and the big drop in imports to the lowest level in four years indicates all is not well with China’s domestic economy,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning note.

“[China is facing] a growing trade surplus that is bound to increase tensions with the US and any form of trade talks, but China does have funds and they will be deployed into ever more economy stimulating infrastructure projects,” he added.

Elsewhere in the complex, the three-month lead price was the laggard over the morning, falling by 1.3% to recently trade at $1,736.50 per tonne, down from Friday’s closing price of $1,775.50 per tonne.

Turnover in LME lead was moderate this morning, with some 1,300 lots exchanged as at 9.55am London time, while open interest remains little changed at 129,644 total open positions on the exchange.

Poor demand from the automotive sector remains a key headwind for LME lead prices, with automotive sales in Europe falling by around 57.3% in May, compared with the same period a year ago.

Supporting forward buying in the metal however, LME lead’s cash/three-month spread was recently seen at $17.62 per tonne contango.

Other highlights

  • In other commodities, Brent crude oil futures were up by 2.32%, recently trading at $42.88 per barrel.
  • West Texas Intermediate (WTI) was recently at $40.37 per barrel, an incline of 3.47%
  • In data from the European Union this morning, German industrial production for the May period fell by 17.9% month on month, topping an expected fall of 16% and worse than the previous decline of 8.9%.
  • The Sentix investor confidence index over the same period showed a level of -24.8, exceeding expectations for a level of -22, but improving from last month’s figure of -41.8.
  • Later this afternoon, European Central Bank (ECB) President Christine Lagarde is due to speak.
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