LIVE FUTURES REPORT 20/09: LME base metals climb higher; Al hits new high

Base metals prices on the London Metal Exchange were stronger across the board in the morning of Wednesday September 20, led by nickel prices climbing 1.8%.

A pick-up in buying activity for stainless steel products has given some lift to nickel prices after they dipped below $11,000 per tonne earlier this week.

Aluminium prices continued to strengthen this morning, hitting a high of $2,182.50 per tonne, the highest since January 3, 2013. LME stocks continue to fall and a further 14,200 tonnes were freshly cancelled today, taking the total amount of cancelled aluminium this week to 41,000 tonnes.

“Investors [are] becoming increasingly confident that recent curbs on Chinese [aluminium] capacity are having an impact,” ANZ Research said.

“This has seen inventories continue to be drawn down. LME stockpiles are down 41% this year, with August levels hitting a nine-year low,” the bank added.

Lead and zinc prices also continue to bounce higher with lead prices finding support from supply tightness amid continuing environmental inspections in China.

“The environmental inspections have driven many miners to suspend production and undergo maintenance, which has tightened the supply of zinc and lead in the last two months,” a Shanghai-based trader said.

Copper continues to bounce back

  • The three-month copper price was up $11.50 to $6,550.50 per tonne.
  • Stocks on the LME increased a net 13,225 tonnes to 313,850 tonnes, which constitutes the majority of the deliveries into Busan and Gwangyang. This follows over 100,000 tonnes of copper delivered into LME-listed warehouses last week.
  • 20,150 tonnes of copper was also re-warranted today as the benchmark cash/three-month rate is currently at a wide $49.50 per tonne contango.
  • “We remain bullish for copper’s fundamentals overall as improving demand and supply disruptions are set to tighten the supply/demand balance,” Metal Bulletin analyst James Moore said. “But the recent build in stocks does little to signal any shortage of material, as the market continues to work through ample scrap availability brought out by higher prices.”
  • The copper price ascent that began about a month ago brought the red metal to a three-year high and suggested that the industry was heading for a strong 2018, but persistent weakness in the physical market prompted a healthy amount of scepticism.
  • Copper is entering a critical period where the mating season will produce annual contracts that represent roughly 80% of all US demand.

Base metals up

  • The three-month aluminium price rose by $49 to $2,173 per tonne. Stocks declined 2,725 tonnes to 1,303,925 tonnes.
  • Nickel’s three-month price was up $205 to $11,345 per tonnes. Inventories dipped 2,766 tonnes to 380,736 tonnes.
  • The three-month zinc price increased by $22.50 to $3,128.50 per tonne. Stocks were down 1,275 tonnes to 266,250 tonnes.
  • Lead’s three-month price was $34 higher at $2,454 per tonne. Inventories dipped 125 tonnes to 162,575 tonnes.
  • The three-month tin price rose by $70 to $20,720 per tonne. Stocks were 105 higher at 2,035 tonnes.

Currency moves and data releases

  • The dollar index was recently down 0.17% to 91.67.
  • In other commodities, the Brent crude oil spot price was up 0.07% to $55.41 per barrel.
  • Today, UK monthly retail sales are due along with a host of US data including existing home sales, crude oil inventories as well as the conclusion of the US Federal Open Market Committee’s September meeting with its economic projections, statement, rate decisions and press conference.
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