LIVE FUTURES REPORT 28/05: LME nickel price slides 1.2% in lackluster trading; zinc bucks downtrend

The three-month nickel price on the London Metal Exchange dropped by 1.2% during morning trading on Tuesday May 28, capped by thin buying interest across Asian trading hours while US-China trade tensions continued to hang over commodity markets.

Nickel prices had soared by more than 4% toward the end of last week, with the metal’s three-month price reaching a one-month high of $12,495 per tonne on Friday, while volumes exchanged were at their highest since April 2018 at more than 16,000 lots.

“The volumes so far on the LME are very thin and it seems that Asian traders have little appetite for the metals at the moment,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning report.

“The rally in prices on Friday seems to have been little more than short covering after days of decline with nickel having the most reaction as June put options with strikes between $12,000-12,300 per tonne went out of the money and hedges were bought back,” he added.

Meanwhile, nickel’s forward spreads have eased slightly, with cash/three-month recently trading in a contango of $8 per tonne and the nearby cash-June similarly in a contango of $9 per tonne.

Earlier this month, forward spreads reached their widest backwardation since 2015, with nickel’s cash/three-month spread trading at $20 per tonne.

Nearby tightness did little to prompt deliveries onto the exchange in recent days, however this morning more than 1,500 tonnes were delivered into LME-registered warehouses in South Korea.

Prior to this, LME nickel stocks were at their lowest level since 2012 and remain low at 165,564 tonnes, with just over 102,000 tonnes on-warrant.

Other highlights

  • Zinc’s three-month price bucked the downtrend this morning, climbing just over 1% to trade at an intra-morning high of $2,599 per tonne. Volumes traded also topped the complex over morning trading at more than 5,000 lots exchanged as of 9.45am London time.
  • Spread tightness in zinc continues this morning, with the galvanizing metal’s cash/three-month spread continuing to trade near record levels at a backwardation of $161 per tonne.
  • Similarly, tin’s cash/three-month spread recently traded in a backwardation of $290 per tonne, easing from $320 per tonne last week, its widest since 2015.
  • The US dollar continues to trade in positive territory, recently seen up 0.15% at 97.75.
  • Data of note on Tuesday includes consumer confidence from the United States, where the Conference Board’s reading is forecast to strengthen to 130.0 from 129.2 in April after the provisional sentiment reading from the University of Michigan hit a 15-year high.

Hassan Butt

hassan.butt@fastmarkets.com

Published

Hassan Butt

May 28, 2019

10:27 GMT

London