LIVE FUTURES REPORT 31/08: Positive data provides boost with LME zinc up 1.6%; nickel worst performer

The three-month zinc price was trading 1.6% higher as it recouped most of the Thursday’s losses with strong volume.

There were 5,941 lots of zinc traded on the exchange as at 09.21am London time – more than any other base metal contract so far today.

“Zinc’s improved micro dynamics has helped alleviate the downside pressure for now but the metal remains at risk of further downside if worries on emerging market currencies take center stage again,” Metal Bulletin analyst Andy Farida said.

The release of better-than-expected data from China is providing some support to the complex this morning. China’s official purchasing managers’ index (PMI) for the manufacturing sector edged up to 51.3 in August from 51.2 in July, after two previous months of decline.

Lead followed its sister metal higher, gaining $20.50 per tonne, while aluminium climbed 1%.

Aluminium prices are well supported by high alumina prices and on-warrant stocks being below 800,000 tonnes for the first time since 2007.

“With declining stocks, tightening spreads and the physical markets starting to wake up post the summer break, the picture looking forward is certainly interesting,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning note.

“For now, it seems we will have to accept the illogical and the markets will just play a high volatility waiting game and today this is also despite good economic numbers from China,” he added.

The rest of the complex ignored the Chinese data release and continued a downward trend. Nickel prices were the worst hit, falling over $100 per tonne, while tin prices dropped below $19,000 per tonne.

“The moves can be explained/justified retrospectively but that doesn’t help us in the here and now as in truth we are dealing with random headlines that can change on a re-tweet,” Matt France, head of institutional sales at Marex Spectron, said.

“The size of the move yesterday will leave the market vulnerable to a reverse higher today should the macro support, but there was some real technical damage done to the complex and with month-end looming large we could yet see more pressure on the bid in the very short term,” he added.

Base metals prices

• The three-month copper price edged $4 per tonne lower to $6,062 per tonne. Stocks declined a net 1,525 tonnes to 265,925 tonnes.
• Aluminium’s three-month price was up $19 per tonne to $2,151 per tonne. Inventories fell 2,300 tonnes to 1,070,750 tonnes.
• The three-month nickel price was down $145 per tonne to $13,140 per tonne. Stocks declined 1,896 tonnes to 238,782 tonnes.
• Zinc’s three-month price was at $2,504.50 per tonne, an increase of $37 per tonne. Inventories declined 2,250 tonnes to 241,575 tonnes.
• The three-month lead price increased $20.50 to $2,092.50 per tonne. Stocks dipped 75 tonnes to 126,150 tonnes.
• Tin’s three-month price was down $295 to $18,900 per tonne. Inventories increased 30 tonnes to 2,940 tonnes.

Currency moves and data releases

• The dollar index edged 0.16% lower to 94.57.
• In other commodities, the Brent crude oil spot price was up 0.02% to $77.74 per barrel.
• In data today, China’s manufacturing PMI for August was better than expected at 51.3, while the non-manufacturing PMI surprised to the upside with a print of 54.2, exceeding a forecast reading of 53.8.
• Later, there is European data including German retail sales and the European Union’s consumer price index flash estimate, while US data due later includes the Chicago PMI and the revised University of Michigan’s consumer sentiment and inflation expectations.