LIVE FUTURES REPORT 29/09: LME base metals stronger; copper climbs higher

The three-month copper price is consolidating recent gains above the $6,500 per tonne mark, trading $19 higher this morning.

“The base metals are looking somewhat stronger this morning following Thursday’s rebounds, but the overall tone in recent weeks has been one of correction and consolidation,” Metal Bulletin senior analyst William Adams said.

“That said, we have viewed the weakness as the market reacting to overbought conditions and have expected dips to attract buying that seems to be emerging now. With China’s National Day Golden Week holiday kicking off next week we expect choppier trading as liquidity thins. We would remain on the lookout for buying opportunities,” he added.

Lead and zinc prices continued to bounce higher this morning still supported by tight supply. Zinc’s cash/three-month spread is still in backwardation; it has eased from the recent high of $66 per tonne back to $37.00.

Commodities prices also earned a reprieve as a lack of further details on recent tax reform plans proposed by US President Donald Trump put a lid on the dollar’s recent climb.

Still, the increased possibility of a US rate increase at the end of the year is expected to continue providing support to the dollar, some market observers noted.

Aluminium and nickel prices remain little changed as they continue to consolidate.

Copper continues higher 

• The three-month copper price was up $19 to $6,541 per tonne. 
• Copper stocks declined a net 1,175 tonnes to 297,250 tonnes, with 1050 tonnes freshly cancelled. 
• Chile’s Escondida copper mine reported a 91% year-on-year decline in net profit for the first half of 2017, which it attributed largely to a 44-day strike at the operation in this year’s first quarter, the company said on Thursday September 28. 
• “Short-covering had pushed SHFE copper higher during last night’s trading…the last day of trading before the holidays is likely to see more investors exit the market,” a Shanghai-based market observer said. 
• Meanwhile, China is already enforcing some restrictions on copper imports, cutting quotas and limiting the number of licences in some regions of the country, sources told Metal Bulletin, although a full ban on scrap copper imports has not yet been confirmed.

Base metals prices 

• The three-month aluminium price rose $1 to $2,132 per tonne. Stocks declined 4,875 tonnes to 1,268,700 tonnes, with 4,275 tonnes freshly cancelled. 
• Nickel’s three-month price dipped $10 to $10,430 per tonne. Inventories fell 3,000 tonnes to 381,942 tonnes. 
• The three-month zinc price was up $6 to $3,153 per tonne. Stocks declined 2,350 tonnes to 255,400 tonnes. 
• Lead’s three-month price increased $27 to $2,497 per tonne. Inventories dipped 325 tonnes to 157,550 tonnes. 
• The three-month tin price was up $120 to $20,720 per tonne. Stocks remained unchanged for the fifth day in a row 2,070 tonnes.

Currency moves and data releases 

• The dollar index dipped 0.07% to 93.10. It has eased after reaching as high as 93.67 on Thursday, the highest since August 18. 
• In other commodities, the Brent crude oil spot price 0.05% to $57.17 per barrel as of 03:39 BST. 
• Economic data due later today includes core PCE price index, personal spending, Chicago purchasing managers’ index (PMI), and revised University of Michigan consumer sentiment from the USA. China’s official manufacturing and non-manufacturing PMI, and Caixin manufacturing PMI for September, due on Saturday, will also be of note. 
• In addition, Bank of England governor Mark Carney and US Federal Open Market Committee member Patrick Harker are speaking later today.