LIVE FUTURES REPORT 14/10: LME nickel price drops 1.8% amid tight spreads; lead follows lower

The three-month nickel price on the London Metal Exchange was lower during morning trading on Monday October 14, failing to hold on to last week’s gains despite a continued draw on LME stocks.

Nickel futures were recently trading at $17,275 per tonne against some 2,400 lots exchanged as at 9.10am London time, slightly improved from the intra-morning low of $17,175 per tonne.

Exacerbating selling pressure, forward nickel spreads on the LME continue to trade in sizeable backwardations, with the metal’s benchmark cash/three-month spread recently seen in a $186.50-per-tonne backwardation.

This comes against a continued draw on the LME’s dwindling nickel inventory, which now sits at just 94,134 tonnes. Of that, just 52,068 tonnes is available on-warrant, with market participants unsure of why tight forward spreads have not yet prompted a large delivery of material onto the exchange.

“Asia stocks extend gains after news last week of a pause in US tariff increases in exchange for increased Chinese purchases of agricultural products. However, there remains some skepticism as analysts comment on the lack of a formal agreement and suggest that tariff escalation remains a possibility,” Marex Spectron’s LME analyst Alastair Munro said in a morning report.

“Indeed base metals have struggled to maintain the upward momentum this morning with China reporting a larger than expected decline in exports and imports in September. Imports fell 8.5% year on year in USD terms, reflective of weaker domestic demand, while weakness in exports was mainly driven by the US,” he added.

Elsewhere in the complex, lead’s three-month price was similarly lower over the morning period, falling by 1.8% but keeping firmly above the $2,100-per-tonne support level amid just over 1,000 lots exchanged as of 9.45am London time.

Meanwhile, forward spreads in lead remain supportive of near term business, with the metal’s benchmark cash/three-month spread recently trading in a contango of $3.55 per tonne.

Other highlights

  • The dollar index was trading higher over the morning, up by 0.07% at 98.41.
  • In other commodities, Brent crude oil futures were down by 1.10% to $60 per barrel.
  • In economic data from Asia on Monday, China’s dollar-denominated trade surplus widened to $39.7 billion in September, from $34.8 billion a month earlier.
  • In data from the European Union, the German wholesale price index on a month on month basis for the September-October period fell by 0.4%, larger than an expected fall of 0.2%.
  • Meanwhile, the EU’s industrial production topped expectations with a seasonally adjusted increase of 0.4% in September.
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