LIVE FUTURES REPORT 03/05: LME base metals on a firm footing, with copper up 1%

Base metals on the London Metal Exchange were broadly positive during morning trading on Thursday May 3, with copper leading the complex’s blanket gains after climbing 1.1%.

The red metal has gathered support during the morning, reaching a high of $6,927.50 per tonne. 

Supported by strong demand from China, the metal has continued to consolidate around the $6,800 per tonne mark, spending most of April in positive territory. 

On Wednesday, the US Federal Reserve announced it would hold interest rates steady, leaving its benchmark lending rate in a range of 1.50%-1.75%. 
The move has resulted in the dollar index dipping 0.3% this morning, which is supporting base metals prices. 

For aluminium, recent strength has been largely attributed to a waning emphasis on sanction-related speculation, supported by this week’s headline that the United States has given investors an additional month to divest or transfer holdings in sanctioned Russian companies, notably UC Rusal. 

The light metal’s cash/three-month spread is currently in a backwardation of $4.50, moving from a contango of $1 on Monday.

“It looks as though we’re seeing a continuation of yesterday’s sentiment. We’ve seen some orders that are filtering through, and China has come from back from holidays in a stronger mood,” Geordie Wilkes, head of research at Sucden Financial, told Metal Bulletin.

“Whether that sentiment carries on in the longer term, is yet to be seen. That said, the markets have responded in a positive way,” he added. 

Elsewhere, nickel’s three-month price has rebounded to back above $14,000 per tonne after spending much of the week close to the $13,500 per tonne mark. 

Currently in a contango of $45, the metal’s cash/three-month spread is indicative of an open market, buoyed further by healthy global stainless steel melting production and strong demand for stainless steel scrap. 

“The stainless steel industry remains the largest nickel consumer by far, though batteries will be the new driver of demand over the next few years,” Commerzbank Research noted. 

Zinc’s three-month price has found support despite dropping below the $3,100 per tonne support level.

The metal reached a high of $3,084.50 over the morning, up 1.2% from Wednesday’s close.

Tin’s three-month price is consolidating around the $21,100 per tonne mark, with strong demand from the electronics sector and modest inflows of LME stock supporting the metal’s price. 

Concerns remain over Indonesia exports after the country’s government has stopped issuing new export licences to review current regulation. 

Tin’s cash/three-month spread is in a backwardation of $121, back from $140 per tonne earlier in the week.  

Base metals gather momentum

• The three-month copper price climbed $78.50 to $6,898.50 per tonne. Stocks fell a net 7,825 tonnes to 316,400 tonnes.
• Aluminium’s three-month price is trading $12.50 higher at $2,334 per tonne. Inventories dipped by 4,125 tonnes to 1,319,300 tonnes.
• The three-month nickel price is trading at $14,105 per tonne, up $125. Stocks were up 8,934 tonne to 315,696 tonnes.
• Zinc’s three-month price was up $33 at $3,080 per tonne. Inventories dipped by 275 tonnes to 236,775 tonnes.
• The three-month lead price climbed $6 higher to $2,276 per tonne. Stocks were up by 925 tonnes at 131,650 tonnes.
• Tin’s three-month price was up $20 at $21,100 per tonne. Inventories were unchanged at 2,225 tonnes.

Currency moves and data releases

• The dollar index was down 0.29% at 92.45.
• In other commodities, Brent crude oil was up 0.48% at $73.40 per barrel. 
• In US data on Wednesday, the ADP non-farm employment change – a precursor to the official jobs report on Friday – was slightly above expectations at 204,000 in April, while weekly crude oil inventories rose 6.2 million barrels, significantly higher than the 1-million-barrel increase forecast.
• A string of US data is due later today, including preliminary non-farm productivity, preliminary unit labor costs, unemployment claims, trade balance, financial services purchasing managers’ index (PMI), ISM non-manufacturing PMI and factory orders.