LIVE FUTURES REPORT 14/09: More deliveries dampen LME copper price; base metals dip lower again

Copper prices on the London Metal Exchange continued to decline in the morning of Thursday September 14, as large stock deliveries continue for the third day in a row.

A further 31,825 tonnes was delivered in to LME-listed warehouses today, with the majority entering Busan, taking the total inventory delivered in over the last three days to 76,800 tonnes.

The three-month copper price has dropped nearly 4% since the start of the week and is now down to below $6,500 per tonne for the first time since the beginning of August.

“The underperformance of LME copper since Monday seems to be driven by a notable deterioration in the present fundamental picture, as gauged by the fluctuations of available inventories,” Metal Bulletin analyst Boris Mikanikrezai said.

“We maintain our constructive view on LME copper over the very short term although we recognise that prices may fall much further in the coming days,” he added.

In the rest of the complex, zinc prices fell back from near ten-year high levels to below $3,000 per tonne, while nickel prices also continued to retreat lower, dropping a further $130 per tonne.

“Nickel extends its underperformance this morning on very good volume with 5,800 lots trading by 8am (+174% on the 20-day average). Nickel has already spanned $420 [and] the market has now traded down 10% from the recent $12,380 high,” Marex Spectron noted.

Prices also came under pressure from the release of disappointing Chinese economic data on Thursday, which showed that the world’s second-largest economy had continued to cool last month, stoking fears that momentum in the country’s economic growth could be starting to decelerate.

Tin was the only base metal to trade in positive territory for the second morning in a row.

Copper continues to dip 

  • The three-month copper price fell $52 to $6,491 per tonne. 
  • Stocks increased a net 29,420 tonnes to 276,025 tonnes. Total copper stocks on the LME are now up 26% since Tuesday. 
  • Cancelled copper now makes up just 33% of total stock, down from over 50% just two weeks ago. 
  • “With investor positioning sitting at record high net long position on the LME in recent days. This was enough to induce some investors to lock in their recent gains,” ANZ Research note. 
  • “Moreover, the copper charts look increasingly negative as the uptrend has now clearly broken down and will likely invite yet more fund liquidation,” Edward Meir of INTL FCStone said.

Base metals prices lower, bar tin 

  • The three-month aluminium price fell $19 to $2,091 per tonne. Stocks declined 1,250 tonnes to 1,315,775 tonnes – with 14,625 tonnes freshly cancelled, the majority being T-Bars in Rotterdam. 
  • Nickel’s three-month price declined $130 to $11,230 per tonne. Stocks increased 384 tonnes to 383,690 tonnes. 
  • The three-month zinc price dipped $19.50 to $3,004 per tonne. Inventories dipped 1,750 tonnes to 265,300 tonnes, this follows over 28,000 tonnes delivered into Antwerp over the past two days. 
  • Lead’s three-month price dipped $9 to $2,281 per tonne. Stocks declined 250 tonnes to 163,300 tonnes. 
  • The three-month tin price was up $45 to $20,560 per tonne. Inventories dropped 60 tonnes to 1,955 tonnes.

Currency moves and data releases 

  • The dollar index dipped 0.2% to 92.34. 
  • In commodities, the Brent crude oil spot price was up 0.07% to $55.08 per barrel. 
  • In Chinese data released, industrial production for August disappointed with a 6.0% rise from a year earlier, compared with an expected 6.6% rise and July’s reading of 6.4%. Retail sales also missed expectations, expanding 10.1% year-on-year last month, against a projected reading of 10.5% and previous reading of 10.4% in July. 
  • China’s fixed asset investment for the year to August also surprised to the downside, logging a 7.8% rise against an expected and previous increase of 8.2% and 8.3%, respectively. 
  • Growth of private investment similarly slowed, coming in at 6.4% for the January-August period, from 6.9% in the first seven months of the year, suggesting small- and medium-sized private firms still face difficulties in accessing financing. 
  • The economic agenda is busy today with an update on UK monetary policy and US data that includes CPI figures for August as well as weekly unemployment claims of note.

What to read next
Aluminium and nickel appear to have once again escaped inclusion in the latest list of sanctions imposed by western governments on Russia, ending days of speculation that increased both the prices and the traded volumes of the metals.
Fastmarkets launches MB-CU-0513 copper cathode equivalent grade (EQ), cif Southeast Asia, $/tonne on Tuesday February 20.
Fastmarkets’ 2024 outlook for key raw materials and ingredients used in the production and distribution of fast-moving consumer goods
Weak demand continues to stem profitability and prevent capacity return in the European aluminium market, Norsk Hydro’s chief executives told Fastmarkets in an exclusive interview on Wednesday February 14.
The publication of Fastmarkets’ rand fixing prices for LME trade for Monday February 12 were delayed due to a technical issue.
The copper concentrate market was already tight, but the addition of major new smelting capacity this year – starting with the expansion of Freeport’s Gresik smelter in Indonesia — will likely mean maintenance breaks, capacity curtailments and potentially even closures while operating costs start to become untenable, Fastmarkets understands.