LIVE FUTURES REPORT 08/10: LME copper price holds above $5,700/t amid high turnover; nickel edges lower

The three-month copper price on the London Metal Exchange was higher during morning trading on Tuesday October 8, holding above nearby support levels amid high turnover, while nickel futures shed 1.1% despite continued stock outflows.

Copper’s outright price was recently seen trading at $5,710 per tonne, maintaining support above its nearby $5,700-per-tonne support level. Turnover was high over the morning due to the return of Chinese participants after a national holiday in the country, leading to some 8,600 lots exchanged as at 9.44am London time.

Supporting the price uptick, some 2,250 tonnes of grade-A copper cathode was removed from LME-registered warehouses in Busan and Kaohsiung this morning, while continued positive arbitrage opportunities with the Shanghai Futures Exchange (SHFE) have led to traders to bolster efforts to send material to China.

In addition, copper’s forward spreads on the LME remain supportive of spot business, with the red metal’s benchmark cash/three-month spread recently trading in a $36.90-per-tonne contango.

“[Monday] predictably was nothing more than a waiting game for the re-opening of the Chinese markets today, where it seems many were looking for a new surge of buying,” Kingdom Futures director and chief executive said in a morning note.

“However this does not seem to be the case. The Caixin services PMI [purchasing manufacturing index] number came in at 51.3, well off the previous level of 52.1 and the forecast of 52.9, and numbers like that could well call the [gross domestic product] forecasts into question,” he added.

Elsewhere in the complex, the three-month nickel price was similarly subdued over the morning period, trading 1.1% lower and consolidating around the $17,500-per-tonne level.

The metal’s price drop comes amid a continued draw on the LME’s dwindling nickel supply, with on-warrant stock levels keeping at their lowest level since 2011 at just 49,542 tonnes.

Yet forward nickel spreads have narrowed over the morning, making buying conditions for spot business less costly. The metal’s cash/three-month spread was recently seen trading in a backwardation of $85 per tonne, easing from $116 per tonne on Monday afternoon.

Other highlights

  • The dollar index was trading lower over the morning, down by 0.12% at 98.86.
  • In other commodities, Brent crude oil futures were up by 0.75% to $58.88 per barrel.
  • In economic data expected on Tuesday, there is producer price figures from the United States as well as speeches by US Federal Reserve Chair Jerome Powel and Bank of England Governor Mark Carney of note.

Hassan Butt

hassan.butt@fastmarkets.com

Published

Hassan Butt

October 08, 2019

10:18 GMT

London