LIVE FUTURES REPORT 21/09: LME base metals dip after FOMC statement; lead bucks the trend

Base metals prices on the London Metal Exchange dipped in the UK morning on Thursday September 21, after the US Federal Open Market Committee (FOMC) statement gave the dollar a boost.

Rates were left unchanged by the Fed – as was widely expected – but hawkish language from the central bank sent the dollar higher as it hinted at another rate increase this year.

“The Fed did not surprise, but the underlying signal was more hawkish than markets expected, shooting the dollar higher,” ANZ Research noted.

The three-month lead price was the only base metal to be trading in positive territory this morning, trading at $2,462 per tonne. The metal is finding support from supply tightness amid continuing environmental inspections in China.

“Lead supply is still under pressure due to the environmental inspections and shortage of concentrates, so it is unlikely that the supply tightness will ease in the short term,” China’s Galaxy Futures said.

Nickel prices have plummeted this morning after recovering yesterday; the three-month price is currently trading $300 per tonne lower.

Copper prices dip

  • The three-month copper price fell $69 to $6,458 per tonne.
  • Stocks declined 2,600 tonnes to 311,250 tonnes, after stocks increased yesterday. Over 100,000 tonnes of copper has been delivered into LME-listed warehouses over the past two weeks.
  • “We remain bullish for copper’s fundamentals but prices had started to look overstretched in the short term so some profit-taking seemed probable, which is now unfolding,” Metal Bulletin senior analyst William Adams said.

Base metals prices

  • The three-month aluminium price was down $13 to $2,164 per tonne. Stocks declined 3,725 tonnes to 1,300,200 tonnes with 43,700 tonnes freshly cancelled – the majority of stock is in Port Klang and Singapore. This latest cancellation means over 84,000 tonnes have been cancelled this week.
  • Nickel’s three-month price plunged by $300 to $11,020 per tonne. Stocks declined 678 tonnes to 380,058 tonnes.
  • The three-month zinc price was down $44 to $3,089 per tonne. Inventories were 1,500 tonnes lower at 264,750 tonnes.
  • Lead’s three-month price ticked up by $2 to $2,462 per tonne. Stocks declined 900 tonnes to 161,675 tonnes.
  • The three-month tin price was down $60 to $20,565 per tonne. Inventories were down 60 tonnes to 1,975 tonnes.

Currency moves and data releases

  • “The more hawkish Fed stance, with FOMC saying it would start reducing its balance sheet from October has given the dollar a boost, with the dollar index rising to 92.55 – we wait to see if that is enough to turn the trend in the dollar, or whether the downward trend will continue to dominate,” Metal Bulletin’s Adams said.
  • In other commodities, the Brent crude oil spot price was down 0.30% to $55.99 per barrel.
  • Data out today includes the European Central Bank’s (ECB) economic bulletin, UK public sector net borrowing, EU consumer confidence as well as US data that includes unemployment claims, the Philly Fed manufacturing index, house price index and the CB leading index.
  • In addition, ECB president Mario Draghi is speaking.

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