LIVE FUTURES REPORT 25/09: LME base metals prices begin to consolidate recent sharp drops

“The base metals are for the most part consolidating after recent gyrations, the exception is nickel where prices are still selling off,” Metal Bulletin senior analyst William Adams said.

“Copper prices ran into dip buying on Friday, while the rest are holding up in high ground and look well placed to challenge highs, although there does seem to be overhead selling around that may continue to either cap the advance or slow progress down,” he added.

Copper prices were little changed this morning as stocks begin to fall again; the three-month price is currently trading over $200 lower than this time last month.

Zinc prices are $44 higher this morning as the cash/three-month spread is currently at $46 per tonne backwardation, the highest level since 2007.

“Supported by a pick-up in procurement ahead of the National Day holiday in China, stocks have declined faster. Meanwhile, downstream demand for refined copper also has increased due to the restrictions [on production] amid ongoing environmental protection and quality inspections [in China],” Citic Futures Research said.

Aluminium prices dipped $19 per tonne today despite a further 29,350 tonnes of metal being freshly cancelled across LME-listed warehouses in Asia. The three-month nickel price edged $75 per tonne higher as it begins to consolidate after recent declines.

The three-month lead price also remains little changed; it has been supported by supply constraints due to tightening supply from lead mines, according to a trader.

Copper consolidates 

• The three-month copper price was up $2.50 to $6,459.50 per tonne. 
• Stocks declined a net 3,800 tonnes to 305,250 tonnes. 
• SHFE copper stocks fell to 141,318 tonnes in the week ended September 22, down 25,429 tonnes or 15.3% on the previous week. It was also the fifth consecutive week that SHFE copper stocks have declined. 
• Asarco’s union workers have ratified a new collective bargaining agreement covering 2,000 employees at five different copper mining and processing facilities in the US states of Arizona and Texas, the United Steelworkers Union (USW) said on September 21. 
• “Judging by its price action, copper is undergoing a long overdue correction,” Metal Bulletin analyst Andy Farida said. 
• “But so far, the pullback is considered healthy and showed no sign of panic selling. Instead, this should test how strong the underlying support is and if the dips will attract late buyers to enter again,” Farida added.

Base metals prices mixed 

• The three-month aluminium price was down $19 to $2,139 per tonne. Stocks declined 4,075 tonnes to 1,290,775 tonnes with 29,350 tonnes freshly cancelled – the majority in Port Klang and Singapore. 
• Nickel’s three-month price was up $75 to $10,495 per tonne. Inventories dipped 768 tonnes to 390,562 tonnes. 
• The three-month zinc price was down $44 to $3,075 per tonne. Stocks declined 1,475 tonnes to 261,925 tonnes. 
• Lead’s three-month price dipped $3.50 to $2,479.50 per tonne. Inventories declined 325 tonnes to 160,925 tonnes. 
• The three-month tin price was up $15 to $20,540 per tonne. Stocks were unchanged at 2,070 tonnes.

Currency moves and data releases 

• The dollar index was up 0.24% to 92.38. 
• In other commodities, the Brent crude oil sport price was up 0.48% to $57.03 per barrel. 
• The economic agenda is light today with German Ifo business climate, the UK’s Financial Policy Committee statement and China’s CB leading index. 
• In addition, US Federal Open Market Committee members William Dudley, Charles Evans and Neel Kashkari as well as European Central Bank president Mario Draghi are speaking.