LIVE FUTURES REPORT 12/04: LME copper price finds support amid softer US dollar; lead slides

Volumes traded in the red metal were high over the morning, topping the complex with 6,376 lots changing hands as at 9.45am London time.

LME on-warrant material in copper remains stable at 177,875 tonnes; up by more than 85% since falling to 21,600 tonnes last month, their lowest level since 2005. If copper stocks had fallen 100 tonnes further, stock levels would have been at their lowest since 1974.

Meanwhile, copper futures have traded in a range of around $150 per tonne over the week, with this morning’s trading already seeing a $97.50-per-tonne range.

“What the surprisingly good Purchasing Managers’ Indices (PMI) had already indicated at the start of the month – namely that sentiment in Chinese industry improved significantly in March – has now been confirmed by ‘hard’ data for the first time today: the Chinese economy stabilized in March,” Commerzbank Research said in a morning note.

“After a weak previous month, exports overall have climbed sharply again of late, which points to better demand for Chinese products abroad. That said, China itself bought considerably less abroad: imports once again declined noticeably in March – for the fourth consecutive month,” it added.

Elsewhere, lead futures are continuing to spiral downward after trading above $2,000 per tonne on April 9. Currently, lead’s three-month price is trading just over $1,920 per tonne, down by 4.3% this week.

Despite renewed concerns at Nyrstar’s Port Pirie smelter in South Australia – in addition to the company’s financial health – global mine production is set to improve after falling by 1.3% in 2018, according to the International Lead & Zinc Study Group (ILZSG).

Similarly, strong demand from the lead-acid batter sector could also support lead buying in 2019, although continued weakness in the global automotive industry continues to hamper investor sentiment.

Next week, investors will be closely watching the earnings calendar for first quarter earnings reports out of major global banks, with lending and revenue forecasts key indicators of global economic health and recession danger.

Other highlights

• Despite a fresh cancelation of just under 25,000 tonnes on Wednesday, aluminium’s three-month price is continuing to trade in a downtrend, recently seen at $1,868 per tonne.
• With LME stocks remaining below 50,000 tonnes on-warrant, zinc futures are continuing to find support around the $2,900-per-tonne level. The metal’s cash/three-month spread remains in a backwardation of $76 per tonne.
• In other commodity news, Brent crude oil futures were trading at $71.28 per barrel over the morning, up by 0.3%. The oil industry is receiving support from supply cuts by the Organization of Petroleum Exporting Countries, while continued pressure on Venezuela’s oil industry remained a contributing factor.
• In US data on Thursday, PPI and Core PPI were up by 0.6% and 0.3% respectively, while weekly unemployment claims were 196,000, below the forecast figure of 210,000.
• Meanwhile, China’s consumer price index (CPI) recorded a year-on-year rise of 2.3% in March, in line with expectations but up significantly from the 1.5% year-on-year gain recorded in the prior month.
• In data on Friday, a basket of Chinese and US import and export data for March is due.
• The University of Michigan will publish a series of preliminary data including US inflation expectations and consumer sentiment.
• February industrial production in the Eurozone is also worth attention.
• In addition, the International Monetary Fund and the World Bank are to hold meetings.