LIVE FUTURES REPORT 17/07: LME base metals push upward on weaker dollar; zinc price recovers 2.2%

After a slight dip in the dollar index, base metals prices on the London Metal Exchange were up across the board during morning trading on Tuesday July 17, despite US-Sino trade tensions continuing to weigh on market sentiment.

The slight downtick in the US currency comes ahead of a congressional testimony on the US economy and monetary policy by Federal Reserve chairman Jerome Powell, due to be delivered this afternoon.

Leading the broad uptrend as a result, zinc prices climbed more than 2% during the morning session, after closing at their lowest level in over a year on Monday.

“We regard the [zinc] price slide, which was presumably exacerbated by the withdrawal of speculative financial investors, as excessive. It is true that two new zinc mines went into operation in recent months and that production is being ramped-up there, meaning that more supply is available,” Commerzbank Research said in a morning note.

“While last year‘s supply deficit of 460,000 tons is set to decline to around 260,000 tons this year, it nonetheless remains sizeable. And even though the Chinese authorities are expected to order production cuts in the steel industry again, we do not believe they will be sufficient to pull the global zinc market out of the deficit,” it added.

Marginal upticks in nickel, tin and lead prices followed a 1% climb in aluminium’s three-month price, while copper prices ticked 0.7% higher on continued supply-side concerns.

Elsewhere, a potential economic slowdown in China after second-quarter gross domestic product growth came in lower than that recorded in the first three months of the year, has weighed on prices, while trade tensions and tariff threats continue to keep investors cautious.

Base metals move higher; zinc leads the way

  • The three-month copper recently traded at $6,236 per tonne, a $44 rise from Monday’s close. Stocks climbed a net 2,525 tonnes to 259,725 total tonnes.
  • Aluminium’s three-month price climbed $22 to $2,076 per tonne. Inventories increased by 19,375 tonnes to 1,175,075 tonnes. Some 8,350 tonnes of material were rewarranted in Busan, with 1,550 freshly canceled across Rotterdam and Singapore.
  • Nickel’s three-month price recently traded $20 higher at $13,690 per tonne. Inventories were down 222 tonnes to 263,298 total tonnes.
  • The three-month zinc price increased $56 to $2,530 per tonne. Stocks fell 2,425 tonnes to 239,625 tonnes.
  • Lead’s three-month price recently traded at $2,185 per tonne, a $10 climb from Monday’s closing price. Inventories were stable at 127,600.
  • The three-month tin price was up $20 at $19,520 per tonne, while inventories climbed 10 tonnes to 3,280 total tonnes. Some 100 tonnes of material were freshly canceled across Port Klang and Rotterdam.

Currency moves and data releases

  • The dollar index was down 0.13% at 94.39.
  • In other commodities, Brent crude oil was up 0.26% at $72.05 per barrel.
  • In US data on Monday, the core retail sales reading for June came in as expected with a 0.4% gain, while the headline reading ticked up by 0.5%, surpassing a forecast increase of 0.4%. The Empire State manufacturing index fell 2.4 percentage points in July to 22.6, but was well above an expected print of 20.3.
  • In data today, we have UK employment releases including average earnings index, claimant count change and the unemployment rate. US data includes capacity utilization rate and industrial production.
  • In addition, US Federal Reserve chair Jerome Powell is speaking before the Senate Banking Committee in Washington DC.
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