LIVE FUTURES REPORT 08/09: LME copper prices drop; base metals continue to dip on correction

Base metals prices on the London Metal Exchange continued to dip lower this morning, Friday September 8, as copper prices fell 1.2%.

Prices are beginning to correct after hitting multi-year highs recently. Downside pressure was moderate, reflecting the positive change to sentiment, with consolidation now taking place, traders said.

Nickel prices are also under pressure, falling over $200 to below $12,000 per tonne for the first time since the beginning of the month. It fell 0.5% at the close on Thursday.

“The markets got whacked up quite a bit recently – they were all looking a bit long, so they have come off a bit,” one trader said.

The rest of the complex was lower but consolidating in its current ranges, other price falls have been slowed by the weakening dollar, which fell following a surge in US jobless claims after Hurricane Harvey.

Tin was the only base metal to be trading in positive territory this morning – edging $5 higher as it remained above $20,700 per tonne.

“Upward momentum in the base metals has waned, but in recent days dips have tended to attract buying – although not enough to attract follow-through buying. As such, with resistance encountered, we do expect more profit-taking and pricing, so would not be surprised to see prices correct for a while,” William Adams, Metal Bulletin senior analyst said.

Copper prices under pressure

  • The three-month copper price was down $85.50 to $6,813 per tonne.
  • Stocks increased a net 2,450 tonnes to 213,175 tonnes.
  • China’s unwrought copper and copper-fabricated product imports were unchanged in August on a monthly basis, while imports for the first-eight months logged a 12% decline.
  • Since the second half of August, copper has moved swiftly towards the highest point since September 2014 on the back of fund-buying and strong economic data from China and the USA. But prices seem to have reached a short-term top with technical selling now erasing some of those gains. 
  • In supply-side news, copper miners in Chile are increasingly optimistic about industry prospects for the mid-to-long term but have said that caution, especially towards costs and investments, is still needed. 
  • The red metal is moving into a deficit for the year, and is set to deepen through to 2021, according to BMI Research.
  • BMI Research has raised its forecast for copper prices to $6,000 per tonne in 2017, up from its previous forecast of $5,500 per tonne, and expects an average price of $7,000 per tonne by 2021 due to a stronger demand picture resulting in steeper-than-expected deficits.

Base metals mostly dip

  • The three-month aluminium price was down $13 to $2,094 per tonne. Stocks were up 125 tonnes to 1,321,550 tonnes.
  • Nickel’s three-month price declined $230 to $11,920 per tonne. Inventories increased 828 tonnes to 384,978 tonnes. 
  • The three-month zinc price declined $42 to $3,087 per tonne. Stocks fell by 875 tonnes to 241,800 tonnes.
  • Lead’s three-month price dropped $37 to $2,303 per tonne. Inventories declined 75 tonnes to 169,375 tonnes.
  • The three-month tin price increased $5 to $20,755 per tonne. Stocks dipped by 25 tonnes to total 1,915 tonnes.

Currency moves and data releases

  • The dollar index declined 0.29% to 91.26. 
  • In other commodities, the Brent crude oil spot price was up $0.44 to $54.72 per barrel.
  • In data, Chinese and German trade balance numbers are due later today; French and British industrial production figures are also expected.
  • In the USA, a speech by FOMC member Patrick Harker will be watched closely by the market.
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