LIVE FUTURES REPORT 20/02: Fresh inflows pressure LME nickel price below $12,800/t; Al sinks despite stock drawdown

The three-month nickel price on the London Metal Exchange was lower during morning trading on Thursday February 20, with price action pressured by continued inflows of material into LME-registered warehouses, while aluminium futures neared the $1,700-per-tonne support level.

Nickel’s outright price on the LME was recently at $12,760 per tonne, a drop of some 0.7% from Wednesday’s closing price of $12,830 per tonne. Turnover was light in nickel with just over 2,000 lots exchanged as at 9.15am London time.

Prompting this, fresh inflows of material continue to see the LME nickel complex rebalance itself, after on-warrant stocks fell to just 43,700 tonnes in December 2019.

Deliverable material now sits at 143,046 tonnes, with some 4,248 tonnes sent into LME-registered warehouses in Port Klang, Malaysia, this morning, while another 120 tonnes was sent into Singapore, against an outflow of 438 tonnes in Johor, Malaysia.

Meanwhile, nickel’s forward spreads continue to trade in the widest contango across the complex, with the metal’s benchmark cash/three-month spread recently trading in a $91-per-tonne contango.

“Looking at the way the prices are moving suggests the bulk of trades are coming from funds and algorithms,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning note on Thursday.

“The idea that there are one or two banks trying to hold the metals prices and avoid a collapse to protect their loans to the metals sector was doing the rounds again yesterday. Whether it is true or not, the prices do seem to have developed a habit of pulling back relatively close to where they started [trading],” he added.

Elsewhere in the complex, the three-month aluminium price continued its downtrend over the morning, recently trading at $1,712.50 per tonne, while turnover was low at just over 1,500 lots exchanged as at 9.30am London time.

This comes despite continued outflows for the light metal, with this morning seeing some 11,525 tonnes removed predominantly from LME sheds in Johor, Port Klang and Singapore. Total on-warrant LME aluminium stocks now sit at 813,875 tonnes.

Forward spreads in aluminium remain wide, with the metal’s cash/three-month spread recently trading in a $29.75-per-tonne contango.

Other highlights

  • In other commodities, Brent crude oil futures were trading 0.07% lower this morning, recently seen at $58.70 per barrel.
  • In data from the United Kingdom this morning, the country’s retail sales rose by 0.9% month on month in January, beating an expected rise of 0.7%.
  • Later, the European Central Bank will release its monetary policy meeting accounts, which detail the economic insights that influenced the governing board’s decision to set interest rates.
  • Meanwhile, market participants can also expect data from the United States this afternoon that includes the Philly Fed Manufacturing Index, with expectations currently set at 10.1. Weekly crude oil inventory data will also be released.