LIVE FUTURES REPORT 28/09: LME base metals prices little changed as consolidation sets in

The three-month copper price edged $10.50 per tonne higher as it struggles to break back through the $6,500-per-tonne mark.

“The base metals remain in correction and consolidation mode as we approach the end of the quarter and the weakness does feel like profit-taking after strong rallies were seen over the summer,” William Adams, Metal Bulletin senior analyst said.

“China’s National Day Golden Week holiday also kicks off next week, so there may well be some book squaring ahead of that. Generally, we do see this weakness as consolidation within up trends – we would let the pullbacks run their course before looking for buying opportunities,” he added.

Nickel continues to look vulnerable; the metal’s three-month price edged up $40 this morning but still remains low at $10,280 per tonne. Zinc and lead prices also increased marginally but are little moved this morning.

“Rumours are circulating about sharp declines in SHFE stock levels at the end of this week. In addition, by the look of the volumes traded on the LME, it suggests that the markets have corrected a heavily-overbought situation across the board just leaving the question of where prices will be pushed towards for the month and quarter-end valuations this Friday,” noted Malcolm Freeman of Kingdom Futures.

The increased possibility of a US rate increase at the end of the year and strengthening dollar could check the upside for commodities prices, some market observers noted.

The dollar has continued to strengthen after Wednesday’s release of US president Donald Trump’s tax reform plan which included corporate and individual tax cuts and hawkish comments from US Federal Open Market Committee chairwoman Janet Yellen on Tuesday. Yellen had noted that it would be “imprudent” to keep monetary policy on hold until inflation reaches 2%, thus lending weight to the possibility of a US rate increase in December.

Copper little moved

• The three-month copper price edged $10.50 higher to $6,447.50 per tonne.
• Stocks declined a net 3,525 tonnes to 298,425 tonnes, with 4,400 tonnes re-warranted in Busan.
• The increased possibility of a US rate increase at the end of the year will check the rebound of copper prices, China’s Minmetals Jingyi Futures said on Wednesday morning.
• In copper data, China’s imports of refined copper rose 9.8% from last year but eased 10.1% from last month to 254,762 tonnes, while imports for copper ores and concentrates fell 0.2% year on year but rose 2.9% in the month to 1.44 million tonnes in August.

Base metals prices

• The three-month aluminium price dipped $11 to $2,120.50 per tonne. Stocks declined 6,525 tonnes to 1,273,575 tonnes with 1,200 freshly cancelled in Gwangyang.
• Nickel’s three-month price increased $40 to $10,280 per tonne. Inventories dipped 216 tonnes to 384,942 tonnes.
• The three-month zinc price edged $14 higher to $3,119 per tonne. Stocks declined 1,600 tonnes to 257,750 tonnes.
• Lead’s three-month price was up $1.50 to $2,463.50 per tonne. Inventories were up 375 tonnes to 157,875 tonnes.
• The three-month tin price was down $40 to $20,660 per tonne. Stocks remained unchanged for the third consecutive day at 2,070 tonnes.

Currency moves and data releases

• The dollar index was down 0.10% to 93.37. The index had reached as high as 93.61 on Wednesday, the highest since August 23.
• In other commodities, the Brent crude oil spot price is up 0.20% to $57.81 per barrel.
• Economic data due later today includes final second GDP, unemployment claims, final GDP price index, goods trade balance and preliminary wholesale inventories from the USA.