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Three-month futures prices were as follows at 9:07 am on Wednesday, February 8, compared with Tuesday’s close:
Eyes have been on aluminium stocks in Gwyangyang warehouses over the past few weeks following an initial delivery of 40,200 tonnes into the region on January 26.
Today’s delivery of aluminium into Gwyangyang totaled 107,900 tonnes, taking total aluminium stocks to 495,750 tonnes – still historically low, but 10% higher than at the start of 2023.
The three-month aluminium price was little changed on Wednesday morning, but the aluminium cash price dropped to $2,473 per tonne.
Aluminum spreads were already trading in a wide contango before the delivery in, but were most recently trading at $38.50-per-tonne contango compared with a contango of $33.50 per tonne a week ago.
Further out, the December 2023 to December 2024 spread has widened out to a $90-per-tonne contango.
Nickel was a strong performer on Wednesday morning, but traded volumes remained low and the metal traded in a range of $27,335-27,900 per tonne in the first few hours of trading.
“The International Nickel Study Group (INSG) estimates that the nickel market recorded a 90,700-tonne surplus in the first 11 months of 2022 after a large deficit of 166,400 tonnes in 2021 as a whole. The INSG forecasts a further annual surplus of 171,000 tonnes in 2023, although it also expects the surplus to be mainly for class II material, principally nickel sulfate.,” Fastmarkets analyst Boris Mikanikrezai said on Wednesday.
“Our cautious view is being validated. We have argued that it will be challenging for nickel prices to break above its January high because we expect nickel prices to be rangebound in the coming months,” he added.
Despite the nickel market recording a surplus, stock levels in LME warehouses continue to decline. A further 528 tonnes were delivered out of the warehouse across Kaohsiung in Taiwan, Port Klang in Malaysia and Rotterdam in Europe. A further 120 tonnes were freshly canceled, leaving total on-warrant stock levels at just 43,200 tonnes.
“While modest upward pressure in February cannot be ruled out — due to the US Fed becoming less hawkish, China reopening to the world and an uncertain supply outlook — we think the risk-reward for being long on nickel from mid-March is not particularly attractive,” Mikanikrezai said.
In copper, meanwhile, positive fundamentals were supporting the red metal as it traded above the $9,000 per tonne support barrier.
“Copper [is being helped] by signs of ongoing supply constraints,” ANZ senior commodity strategist Daniel Hynes said. “Chile, the biggest copper-producing nation, reported a sharp fall in export revenues, with copper shipments totaling $2.98 billion in January — down 30% from December and 22% below January last year.
“Chile has been beset by a series of setbacks at its mines, as well as by declining ore quality and water restrictions. This comes as social unrest in Peru threatens to disrupt supply.,” Hynes added.