LIVE FUTURES REPORT 13/03: LME base metals begin to recover; nickel’s bumpy ride continues

“The LME complex is a mixed bag with zinc and nickel finding some [arbitrage] related buying and aluminium [finding] some light consumer demand to help lift [prices] off last night’s poor closing levels,” Marex Spectron noted.

Nickel prices continue to be on a rollercoaster – the three-month price closed $165 per tonne lower on Monday but has recovered $150 per tonne so far this morning.

Despite pushing higher, nickel continues to find overhead pressure at the $14,000-per-tonne level, with the market’s opinion of the metal divided.

“Investors’ views on nickel prices are divided. The optimism surrounding the metal’s use in the battery industry as well as recent policies and declining stocks seem to be encouraging a rally in prices, while nickel’s main downstream sector, stainless steel, looks to be calling for a correction in the price of nickel. Therefore, traders are struggling to decide on how to proceed with this volatile metal,” a Shanghai-based hedge fund manager said.

“Nickel is a confusing one. It pushes higher due to the electric vehicle story and gets caught up, but really that will not have a significant effect on the market for a few years,” a European trader added.

The three-month zinc price recouped Monday’s losses to climb $28.50 per tonne higher this morning, while lead was up by $22.50 after 8,000 tonnes of stock was cancelled in Antwerp.

“The stock level ‘game’ looks to be a viable argument as most consumers I speak with report good demand with steady forward order books and the biggest merchants saying business levels are the best they have seen for many years,” Malcolm Freeman of Kingdom Futures said.

“For the moment, the problem with price levels in the very short term is, as said, the demand not fully showing its hand yet, still overbought speculative positions and prices that are knee jerk news driven,” he added.

Copper prices were little changed this morning – stocks have increased for the second trading day in a row, but any decline is being capped by news that workers at Antofagasta’s Los Pelambres copper mine in Chile voted to strike.

The three-month aluminium price also continues to trade sideways, with the market awaiting further clarity from the section 232 announcement.

Base metals prices

• The three-month copper price was most recently trading $3 higher at $6,916 per tonne. Stocks increased a net 350 tonnes to 321,475 tonnes.
• Aluminium’s three-month price was up $6.50 to $2,097.50 per tonne. Inventories declined 4,700 tonnes to 1,301,700 tonnes.
• The three-month nickel price recovered $150 to $13,825 per tonne. Stocks dipped 426 tonnes to 326,364 tonnes.
• Zinc’s three-month price was most recently trading at $3,268 per tonne, an increase of $28.50. Inventories declined 2,500 tonnes to 197,500 tonnes.
• The three-month lead price increased $22.50 to $2,365.50 per tonne. Stocks edged 100 tonnes lower at 131,300 tonnes, with 8,000 tonnes freshly cancelled.
• Tin’s three-month price was up $40 to $21,415 per tonne. Inventories increased 5 tonnes to 1,670 tonnes.

Currency moves and data releases

• The dollar index was up 0.19% to 90.06.
• In other commodities, the Brent crude oil spot price was up 0.24% to $65.05 per barrel.
• The economic agenda is relatively light today with focus falling to the release of the United States’ consumer price index (CPI). The UK’s annual budget release is also of note today.
• In addition, there is an Economic and Financial Affairs Council meeting.
• “CPI will be important for near-term dollar valuation with weaker wage growth reported Friday. Any weakness in price growth would see downside pressure on USD intensify,” ANZ Research said on Tuesday.
• Participants will also be looking ahead to Wednesday with major releases including Chinese industrial production, fixed asset investment, retail sales and foreign direct investment along with retail sales, producer price index (PPI) and crude oil inventories from the US.