LIVE FUTURES REPORT 14/11: LME base metals weaker; nickel fails to make gains

The three-month nickel price climbed 3% at the close on Monday but has since dropped $160 per tonne. Nickel failed to stabilize and has been inconsistent over the last few weeks following its rapid rally to the $13,000 per tonne mark during LME Week.

Aluminium was the only base metal to trade in positive territory, although it was most recently only $1.50 per tonne higher than its Monday close price.

The three-month aluminium price continues to trade sideways while doubts emerge over the extent of winter production cuts among Chinese smelters (November 15, 2017 to March 15, 2018), due to a lack of news on further output cuts.

“From our understanding, we are inclined to believe that winter production cuts in Shandong will be small, or even zero,” China’s Minmetals Jingyi Futures said on Monday.

Following a lack of production cut news, Shandong had lowered its fourth-quarter Chinese aluminium production cuts estimate to 1.7 million tonnes from 2.7 million tonnes.

The rest of the complex dipped lower but remained little changed while the metals await further direction.

“The base metals are on divergent paths… but do not seem in a hurry to become directional again,” William Adams, Metal Bulletin senior analyst said.

“This suggests trading is balanced at these high price levels. Overall, we expect prices to generally hold up well and remain bullish of the fundamentals, but prices may have already discounted the present bullishness,” he added.

Base metals prices

• The three-month copper price dipped $19 to $6,876 per tonne. Stocks increased a net 525 tonnes to 258,800 tonnes, with 9,275 tonnes freshly cancelled.
• Aluminium’s three-month price was up $1.50 to $2,109.50 per tonne. Inventories declined 4,050 tonnes to 1,161,275 tonnes.
• The three-month nickel price fell $160 to $12,330 per tonne. Stocks dipped 504 tonnes to 379,590 tonnes.
• Zinc’s three-month price declined $12 to $3,201 per tonne. Inventories declined 1,575 tonnes to 230,675 tonnes. 
• The three-month lead price was most recently at $2,492.50 per tonne, a decline of $30.50. Stocks were up 25 tonnes to 146,300 tonnes.
• Tin’s three-month price fell $80 to $19,420 per tonne. Inventories fell 40 tonnes to 2,040 tonnes. 

Currency moves and data releases

• The dollar index fell 0.15% to 94.38.
• In other commodities, the Brent crude oil spot price was down 0.29% to $62.88 per barrel.
• Key economic data from China released on Tuesday morning, which was largely in line with expectations.
• China’s industrial production grew 6.2% year on year in October, slightly below the 6.3% forecast, while fixed asset investment in the January-October period increased 7.3% on an annual basis, in line with expectations. The country’s retail sales for October surprised to the downside with 10% year on year growth – below the expected 10.5% increase.
• Key economic data of note out later today includes producer prices from the United States, alongside European Union flash gross domestic product and the German ZEW economic sentiment.
• In addition, European Central Bank president Mario Draghi and Federal Reserve chair Janet Yellen are due to speak later today.
• The US October inflation data to be released on Wednesday will also be keenly watched, with anything less than the expected 1.7% year on year reading on the core measure likely to prompt some renewed doubts on the US Federal Reserve raising US interest rates in December and could hurt the dollar, National Australia Bank noted.