LIVE FUTURES REPORT 09/01: LME aluminium price holds below $1,800/t despite 120kt fresh cancelation; nickel rallies above $14k/t

The three-month aluminium price on the London Metal Exchange was little moved during morning trading on Thursday January 9, with price action largely unaffected by a fresh cancelation of some 119,675 tonnes out of LME-registered warehouses in Asia.

Aluminium’s underlying price on the LME was recently seen at $1,795 per tonne, trading just $10 per tonne shy of its intra-morning high and keeping below the $1,800-per-tonne resistance level.

Turnover in LME aluminium was average at more than 2,000 lots exchanged as at 9am London time.

This morning’s fresh cancelations saw the bulk of material booked out of LME-registered warehouses in Asia, with some 66,800 tonnes freshly canceled in Johor, 41,525 tonnes in Port Klang, 6,750 tonnes in Gwangyang and 4,600 tonnes out of Singapore.

Meanwhile, forward spreads in LME aluminium remain wide, with the light metal’s benchmark cash/three-month spread recently trading in a $31.75-per-tonne contango.

“In any event the [metals] markets are in a vacuum as we wait to get past the Chinese New Year and as the data is starting to show that the decline in individual activity is beginning to bottom out,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning report.

“Beijing will be looking to kick start the economy and that brings in infrastructure projects that will increase demand for metals,” he added.

Meanwhile, the three-month nickel price was higher over the morning, climbing by just under 1% and recently trading at $14,195 per tonne against moderately low turnover, with some 1,500 lots exchanged as at 9.30am London time.

Supporting buying momentum, forward spreads in LME nickel remain wide, with the metal’s cash/three-month spread recently seen in an $82.50-per-tonne contango, the widest across the complex.

Despite this, LME nickel has seen more than 17,000 tonnes delivered into registered warehouses over January, taking total on-warrant nickel stocks to their highest level since February 2019 earlier this week at just over 138,000 tonnes.

After a fresh cancelation of 2,112 tonnes this morning out of LME-registered warehouses in Moerdijk, the inventory now sits at 137,778 tonnes.

Other highlights

  • In other commodities, Brent crude oil futures fell by 0.02% this morning, recently trading at $66.05 per barrel. Oil prices spiked after a United States airstrike killed key Iraqi and Iranian military officials at the Baghdad airport last week.
  • In European data released on Wednesday, German factory orders on a month on month basis for the December period fell by 1.3%, missing an expected rise of 0.2%.
  • In US data on Wednesday, the ADP non-farm employment change showed private sector employment increased by 202,000 jobs in December 2019 from November, much higher than the expected 160,000-job increase. Meanwhile, crude oil inventories climbed by 1.2 million barrels in the week to January 3-8.
  • Today, the European Union’s unemployment rate for the December period held at 7.5%, while German industrial production on a month on month basis for the same period improved by 1.1%.
  • Later, the US will release figures on its 30-year bond auction. The previous bid-to-cover ratio, which represents bond market liquidity and demand, was 2.31:2.5 at the prior reading.