LIVE FUTURES REPORT 22/09: LME base metals prices drop; nickel plummets on weak stainless steel demand

Base metals prices on the London Metal Exchange were mostly weaker in the morning of Friday September 22, after prices slumped yesterday evening on fresh US sanctions against North Korea.

The three-month copper price has hit a new five-week low after US President Trump extended the scope of sanctions to individuals that provide goods, services or technology to North Korea. The red metal is currently trading $57 per tonne lower, while lead and zinc prices were both down over $60.

Trump also said the Chinese central bank has told other banks in the country to stop doing business with North Korea with immediate effect.

The three-month nickel price is the worst performer, trading $450 per tonne lower, as prices are also under pressure due to soft demand from China’s stainless steel sector.

“The environmental inspections have affected production of stainless steel which in turn has seen demand for nickel decline,” Ellie Wang, senior nickel and ferro-chrome analyst at Metal Bulletin, said.

“Trading volumes and prices of stainless steel have both fallen recently and the risk of a build-up in stainless steel stocks has increased, which is putting a great amount of downward pressure on nickel prices,” China’s Galaxy Futures said.

Tin was the only base metal to be in positive territory this morning, trading $90 higher at $20,540 per tonne.

Aluminium prices dropped $45.50 per tonne despite further cancellations of metal today taking the total amount of aluminium freshly cancelled this week to 100,000 tonnes.

Copper dips

  • The three-month copper price was down $57 to $6,423 per tonne.
  • Stocks declined a net 2,200 tonnes to 309,050 tonnes. More than 100,000 tonnes of copper was delivered into LME-listed warehouses over the past two weeks.
  • “Although we recognise LME copper prices may fall much further in the immediate term due to the resurgence of risk aversion, the significant rise in visible inventories since the start of the month, and its relatively long spec positioning, makes us think the major uptrend in prices will continue for the remainder of the year and next,” Metal Bulletin analyst Boris Mikanikrezai said.

Base metals prices

  • Aluminium’s three-month price dipped $45.50 to $2,128.50 per tonne. Inventories declined 5,350 to 1,294,850 tonnes, with 15,300 tonnes freshly cancelled.
  • The three-month nickel price was down $450 to $10,575 per tonne. Stocks increased 1,272 tonnes to 381,330 tonnes.
  • Zinc’s three-month price was down $65 to $3,037 per tonne. Inventories declined 1,350 tonnes to 363,400 tonnes.
  • The three-month lead price was $68 lower at $2,445 per tonne. Stocks declined 425 tonnes to 161,250 tonnes.
  • Tin’s three-month price was up $90 to $20,540 per tonne. Inventories increased by 95 tonnes to 2,070 tonnes.

Currency moves and data releases

  • The dollar index is down 0.31% to 91.90.
  • In other commodities, the Brent crude oil spot price is down 0.23% to $56.29 per barrel.
  • Today, we have a host of flash manufacturing and services PMI data out across Europe and the USA.
  • In addition, UK Prime Minister Theresa May is speaking about Britain’s post-Brexit relationship with the EU later.
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