LIVE FUTURES REPORT 16/07: LME nickel price sinks 2% in lackluster morning trading; copper corrects in 0.8% downturn

The three-month nickel price on the London Metal Exchange was the biggest underperformer during morning trading on Thursday July 16, with the market facing risk-off pressure amid a recent oil spill from a large producer, while fresh stock withdrawals failed to stem a downward correction in the LME copper price.

Nickel’s outright price on the LME was recently trading at $13,245 per tonne, down by more than 2% from Wednesday’s closing price of $13,528 per tonne, while turnover was moderate at some 2,200 lots exchanged as of 10am London time.
Despite well-stocked inventories in multiple locations across Europe and Asia, the price downturn in LME nickel comes amid a second Arctic oil spill from producer Nornickel, prompting calls for management changes at the company.
Meanwhile, nickel’s forward spreads on the LME have tightened over the week, with the metal’s benchmark cash/three-month spread recently trading at $37.17 per tonne contango, narrowing from $40 per tonne contango on Wednesday.
Elsewhere in the complex, the three-month copper price was also subdued over the morning, falling by 0.8% to recently trade at $6,344 per tonne. Turnover in the red metal was moderate at more than 6,500 lots exchanged as of 10:15am London time.
Yet LME copper’s price downturn comes after some 7,650 tonnes were removed out of LME-registered warehouses in mixed locations this morning, while another 3,500 tonnes were freshly canceled across warehouses in Busan and Rotterdam.
But while production concerns out of Chile prompted a spike to price levels not seen since 2018, LME copper’s correction comes despite loose forward spreads, with the metal’s cash/three-month spread recently trading at $7.25 per tonne contango, from $9 per tonne backwardation last week.
“Looking at copper mining production data, if the numbers haven't dropped like everyone thinks they will, this market will absolutely dump. We need to see the data to confirm it, otherwise this is a very fragile bull market,” an LME trading source told Fastmarkets.
Other highlights
  • In other commodities, Brent crude oil futures were down by 0.66%, recently trading at $43.38 per barrel.
  • The West Texas Intermediate (WTI) was recently at $40.84 per barrel, a decline of 0.91%.
  • In economic data from China this morning, the country’s industrial production rose by 4.8% year on year in June, which was in line with expectations. Retail sales over the same period fell by 1.8% however, missing an expected climb by 0.5%.
  • China’s unemployment rate for the June was better than expected at 5.7%.
  • Later, the United States will release data on retail sales and unemployment claims.

Hassan Butt

hassan.butt@fastmarkets.com

Published

Hassan Butt

July 16, 2020

11:00 GMT

London