LIVE FUTURES REPORT 16/05: LME aluminium price climbs 0.5% amid 33kt fresh cancelation

The climb marks the light metal’s highest price since April 26, but its three-month price has not traded above $1,900 per tonne since April 5, despite more than 400,000 tonnes booked for removal this year in mostly LME-registered Malaysian warehouses.

This morning, more than 20,000 tonnes were freshly canceled in Singapore, with another 10,000 tonnes booked out of warehouses in neighboring Johor, taking total on-warrant aluminium stocks to 802,675 tonnes, with more than 30% of total LME stocks now canceled.

“Given the poor Chinese data release, yesterday’s move higher across risk assets initially appeared counter-intuitive although subsequent news was that auto tariffs on the EU and Japan were to be delayed by up to 6 months,” Marex Spectron’s LME analyst Alastair Munro said in a morning report.

“But then late in the day, [US President Donald] Trump signed an executive order expected to restrict Chinese telecoms companies from dealing with American [companies]. So naturally questions are going to remain around the ability of the metals to maintain yesterday’s gains,” he added.

Meanwhile, despite falling by more than 3% earlier this week amid a resurgence of US-China trade tensions, nickel’s three-month price has maintained ground above $12,100 per tonne, while continued outflows and fresh cancelations keep total LME stocks at seven-year lows of 165,474 tonnes.

Nickel’s forward spreads have shown little sign of easing during morning trading, with its cash/three-month spread differential recently seen in a backwardation of $9 per tonne, while nearby June-July spreads were recently in a $33 per tonne backwardation.

Other highlights

• The US dollar index remains in positive territory this morning, but was down 0.05% at 97.50.
• In other commodities, Brent crude oil futures continue to trade around $72 per barrel, fueling concerns over supply shortages in the market. Iran and Russia have both cut exports in May, prompting concerns for the Organisation of the Petroleum Exporting Countries (OPEC) regarding its upcoming supply-cutting deal in June.
• In Chinese data on Wednesday, fixed asset investment grew by 6.1% in the January-April period from a year earlier, down from growth of 6.3% in the first quarter of the year.
• Industrial output expanded by 5.4% in April, down significantly from the 8.5% growth recorded in the prior month. Chinese retail sales were similarly poor last month with a year-on-year increase of 7.2% compared with the prior’s month gain of 8.7%.
• This was followed by soft data from the US which saw retail sales fall unexpectedly in April with a decline of 0.2% after March’s 1.7% surge.
• Other US releases were similarly soft with industrial production dropping by 0.5% in April versus a 0.2% gain in the prior month and the capacity utilization rate slipping to 77.9% from a downwardly revised 78.5% previously.
• US data of note on Thursday includes building permits, the Philadelphia Fed manufacturing index, housing starts and unemployment claims.
• In addition, US Federal Open Market Committee member Lael Brainard and UK Monetary Policy Committee member Jonathan Haskel are due to speak.