LIVE FUTURES REPORT 09/10: LME nickel price rallies; copper dips on Chinese market return

Nickel has risen $265 per tonne and looks to climb back above $11,000 per tonne after Chinese market participants returned from the Golden Week holiday.

“The base metals seem well placed to work higher again. Rallies got going last week and consolidated on Friday, but with China coming back into buying mode, the outlook is positive. That said, a lot of the metals’ prices are already in high ground so trading is likely to become more volatile as we started to see at the end of last week,” Metal Bulletin senior analyst William Adams said.

Zinc prices also followed higher despite 9,050 tonnes being delivered into New Orleans; the price has been supported recently by tightening supply.

The three-month tin price also recovered from a $400 per tonne dip at the close on Friday – it was up $220 while LME stocks remained static.

Copper prices eased $13.50 per tonne lower while they continue to consolidate at the current level. Chilean copper mine Escondida has reached an early wage deal with its supervisors’ trade union, Sindicato No 2. The deal allows Escondida to seek the resumption of contract talks with its worker’s trade union, Sindicato No 1.

“Chinese traders have returned to the markets today after their week off for the Golden Week holiday. Metals prices on the [Shanghai Futures Exchange] are, thus, catching up with some of the price gains achieved on the LME in London last week. The picture on the LME is mixed as the new week gets underway: whereas zinc, nickel and tin are making some gains, aluminium, copper and lead are largely unchanged,” Commerzbank noted in their commodities daily report.

Copper prices

• The three-month copper price dipped $13.50 to $6,653 per tonne.
• Stocks declined a net 2,450 tonnes to 291,000 tonnes, with 2,600 tonnes freshly cancelled. 
• Concerns of tight supply ahead of a traditional peak demand season for copper is expected to lend support to copper prices throughout the day. 
• “In the physical market, the supply of red metal was tight before [China’s] week-long holiday while [copper] stocks on the SHFE continuously declined, with over 100,000 tonnes coming out of SHFE-approved warehouses in September. In the meantime, inventories in the [Shanghai] bonded area have also been decreasing,” an analyst at China’s Galaxy Futures said.
• 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 between January and June 2017, the International Copper Study Group estimates. 
• The rebuilding effort in and around Houston, Texas, is having a noticeable impact on the country’s copper wire market while people start repairing their homes and replacing flooded cars.

Base metals mixed

• The three-month aluminium price dipped $4.50 to $2,148.50 per tonne. Stocks declined 4,425 tonnes to 1,242,450 tonnes.
• Nickel’s three-month price was up $265 per tonne to $10,850 per tonne. Stocks fell 1,638 tonnes to 384,864 tonnes.
• The three-month zinc price was up $25.50 to $3,260.50 per tonne. Inventories were up 7,875 tonnes to 258,575 tonnes.
• Lead’s three-month price was down $20 to $2,513 per tonne. Stocks dipped 250 tonnes to 154,875 tonnes.
• The three-month tin price was up $220 to $20,770 per tonne. Inventories were unchanged at 1,970 tonnes.

Currency moves and data releases

• The dollar index was down 0.13% to 93.70. 
• In other commodities, the Brent crude oil spot price was down 0.49% to $55.23 per barrel. 
• In data today, China released its Caixin Composite Output Index, which covers manufacturing and services companies. The index fell to 51.4 in September from 52.4 in August, marking a three-month low. Meanwhile, China’s Caixin General Services Business Activity Index declined to 50.6 last month from 52.7 in August, the worst reading since December 2015.
• The economic agenda is light today with German industrial production and EU Sentix investor confidence due.