LIVE FUTURES REPORT 10/09: LME copper price slides 1.7% in broad sell-off; nickel slips below $14,800/t

The three-month copper price was the standout underperformer during morning trading on Thursday September 10, after a complex-wide sell-off emerged during the Asian trading session, while LME nickel futures continued to correct firmly below the $15,000-per-tonne threshold.

Copper’s outright price on the LME was recently seen at $6,637 per tonne, down by more than 1.7% from Wednesday’s closing price of $6,734 per tonne, while turnover was moderately high at some 6,600 lots exchanged as of 10.45am London time.

Meanwhile, LME copper’s tight forward curve remains a key concern for market participants, with some indicating a squeeze in place.

That said, after sustained outflows saw LME on-warrant copper stocks fall to their lowest level since 2005 last month, this morning’s net inflow of some 2,550 tonnes saw the bulk of material enter LME-registered warehouses in Rotterdam, where stocks are now gradually rising. A total of 5,925 tonnes now sits on-warrant in the region, up from just 350 tonnes a week ago.

Despite a marginal inflow however, LME copper’s benchmark cash/three-month spread remains tight, with the spread most recently trading at $20.75 per tonne backwardation.

“While algorithms and what is left of the human trading community try to make sense of the continued flow of news, the fundamentals of the markets are still making positive gains in the world of metals, with order books picking up in the world of semi-fabrication and indeed other sectors as global economies wake from their coronavirus-inspired hibernation,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning note.

Elsewhere, the three-month nickel price on the LME was lower over the morning, recently trading at $14,785 per tonne and sinking further below the $15,000-per-tonne threshold. Turnover was particularly low for nickel, with just over 1,700 lots exchanged as of 11am London time.

Yet the metal’s sharp correction comes amid strong end-use demand in both the steel and electric vehicle sectors, in addition to a wide forward curve, supporting trade.

LME nickel’s cash/three-month spread was recently seen at $40.50 per tonne contango, widening from $34 per tonne contango last week.

Other highlights

  • Elsewhere in the complex, the three-month LME zinc price was down by around 1.2% over the morning period, recently trading at $2,398 per tonne and falling below nearby support level.
  • Meanwhile, LME lead’s outright price on the LME was equally subdued, after a fresh inflow of some 8,525 tonnes was delivered in to exchange-registered warehouses in Hamburg. LME lead was recently trading 1.1% lower at $1,872 per tonne.
  • In other commodities, Brent crude oil futures were down by 0.71%, recently trading at $40.31 per barrel.
  • The West Texas Intermediate (WTI) oil price was recently at $37.48 per barrel, a decline of 1.10%.
  • Meanwhile, the US dollar index remains in negative territory, recently trading at 93.04.
  • In economic data from the European Union this morning, French industrial production month on month for the August-September period was up by 3.8%, missing an expected climb of 5.1%.
  • In Italy, industrial production over the same period improved by 7.4%, beating an expected increase of 3.6%.
  • Later, the European Central Bank is set to meet, while the United States will release data on its producer price index, in addition to weekly unemployment claims.
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