LIVE FUTURES REPORT 16/03: LME copper price tumbles below $5,300/t despite 11kt fresh cancelation; others suffer

The three-month copper price on the London Metal Exchange was lower during morning trading on Monday March 16, slipping below the $5,400-per-tonne resistance level despite a sizable fresh cancelation, while the red metal’s price continues to weaken with broad risk-aversion capping investment in commodity markets.

Copper’s underlying price on the LME was recently seen at $5,290 per tonne, its lowest level since November 2016, while some 11,000 lots of the metal had traded by 10.00am London time.

Yet the price weakness in copper comes after approximately 11,000 tonnes of grade A cathodes were freshly booked out of LME-registered warehouses, some 10,000 tonnes of which were booked out of warehouses in the Dutch port of Rotterdam.

This takes total LME on-warrant copper stocks down to 130,675 tonnes out of a total 179,725 tonnes, while Rotterdam remains the largest stockpile of deliverable copper cathodes across the LME’s warehouse network, with some 41,950 tonnes on-warrant.

Stock volatility in LME copper comes amid positive forward spreads for the red metal, with its benchmark cash/three-month spread recently trading in at $15.25 per tonne contango.

“There will be a glut of production, banks will not be so eager to finance inventories, warehouse stocks despite ‘games’ will net start to rise as global exchanges become markets of last resort,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning note, citing the effects of the novel coronavirus (2019-nCOV) pandemic.

“For a virus that cannot be seen by the naked eye, its effects will be very visible and unless there is some sort of miracle vaccine, the road to economic recovery will be long and very hard,” he added.

Elsewhere in the complex, the three-month nickel price was equally under pressure over the morning session, dipping below the $12,000-per-tonne threshold amid a rewarranting of some 7,542 tonnes across Rotterdam warehouses, taking total on-warrant LME nickel stocks to 169,032 tonnes.

This comes despite moderately low turnover in LME nickel over the morning, with just over 2,500 lots exchanged as at 9.45am London time.

Similarly, forward spreads in LME nickel remain positive, supporting both the retention and financing of material. Nickel’s cash/three-month was recently seen at $49 per tonne contango.

Other highlights

  • In other commodities, Brent crude oil futures were recently trading 9.26% lower at $32.99 per barrel.
  • In data this morning, China’s industrial production fell by 13.5% year on year in February, much steeper than the forecast drop of 3%. Fixed asset investment in the year to date was down by 24.5% compared with the expected drop of 2%.
  • Later today, the Group of Seven (G7) – which includes the United States, United Kingdom, Canada, Italy France, Germany and Japan – plans to meet once again to discuss measures to deal with the outbreak of the coronavirus.
  • In addition, the US will release data on its Empire State Manufacturing index.