LIVE FUTURES REPORT 22/03: LME copper price softens amid dollar strength; nickel trades below $13,000/t

Copper’s three-month price on the London Metal Exchange was trading below $6,400 per tonne during morning trading on Friday March 22, capped by a rebound in the US dollar index.

Volumes traded for copper over the morning were moderate, with just over 6,800 lots changing hands as of 9:55am London time, while on-warrant material continues to push higher and is now above 140,000 tonnes.

Deliverable LME copper material fell to its lowest level in more than a decade earlier this month to 21,600 tonnes. Correspondingly, the backwardation in the red metal’s cash/three-month spread has eased, recently trading at $14 per tonne from $20 per tonne on Thursday.

“As expected, the Ministry of Commerce confirmed yesterday that US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will visit Beijing from March 28 to 29 to attend what is the eighth round of China-US trade talks,” BANDS Financial commodity analyst John Browning said in a morning report.

“The fact that the US Balance of Trade numbers will be released on the March 27 may provide an interesting frame to the discussion. The last US Balance of Trade print was the worst performance for the United States since 2008 as exports declined and imports recovered,” he added.

Meanwhile, after nickel futures corrected by more than 3% at Thursday’s close, the metal’s three-month price continues to trade below its nearby-$13,000-per-tonne resistance level, while strong demand and low LME stocks continue to fuel volatile swings in the metal’s price action.

Chinese stainless steel production continues to dwindle, which could have a negative effect on nickel demand, while the National Bureau of Statistics in China indicated industrial production on the whole was lower in the first two months of 2019, with China’s auto industry production down 15% during that period.

Elsewhere, equity markets continue to record gains amid US president Trump’s indications that trade resolution with China could still incorporate tariffs, while both the Dow Jones Industrial Average and S&P 500 Index are both up by around 1% this morning.

Other highlights:

  • In aluminium, three-month price action remains below $1,900 per tonne, with a rewarranting of just under 100,000 tonnes last week adding downward pressure to prices, which are down just under 3% this week.
  • The US dollar index was up by 0.41% this morning to 96.74.
  • The zinc-lead price differential, or switch, is now at $794 per tonne.
  • In US data on Thursday, weekly jobless claims fell by 9,000, while the Philadelphia Federal Reserve’s business outlook index for March beat expectations at 13.7, up from -4.1 previously.
  • In a host of manufacturing data from the EU, French flash services PMI for the February-March period fell to 48.7, down from 50.2 previously, while the country’s flash manufacturing PMI over the same period was similarly down to 49.8, from 51.5 previously.
  • Germany’s flash services PMI over the same period fell to 54.9, from 55.3 previously, while its flash manufacturing PMI fell to 44.7, from 47.6 before.
  • The EU’s flash services PMI for February-March dipped to 52.7 from 52.8 previously, while flash manufacturing PMI was worse, falling to 47.6 from 49.3 previously.
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