LIVE FUTURES REPORT 23/07: LME nickel price up 3.3% in high-volume trading; copper C/3M narrows

The three-month nickel price on the London Metal Exchange was higher during morning trading on Thursday July 23, with strong turnover across the Asian session leading price action to gain just under $400 per tonne over the morning, while copper spreads continued to tighten.

Nickel’s outright price on the LME was recently trading at $13,520 per tonne, appreciating from a morning low of $13,070 per tonne, while turnover was strong at more than 3,500 lots exchanged as of 9.10am London time.

Fresh demand for stainless steel has emerged this week in Asia after China’s seasonal rains began to ease, while continued economic stability in the region has seen steady buying in LME futures.

But forward buying in LME nickel remains constrained by a narrowing forward curve, with the metal’s cash/three-month spread recently trading at $40.34 per tonne contango, softening from $55 per tonne contango last week.

Elsewhere in the complex, the three-month copper price was also higher over the morning, climbing by 0.6% over the morning to keep firmly above the $6,500-per-tonne support level, while turnover was moderate at just over 3,700 lots exchanged as of 9.35am London time.

Upward momentum in LME copper continues to stem from supply-side concerns out of Chile, the world’s largest copper producer, with key production facilities at Codelco and Antofagasta reporting strike action and pandemic-related closures this month.

This has prompted LME copper’s forward curve to tighten throughout July, with the red metal’s benchmark cash/three-month spread recently trading in $17 per tonne backwardation, tightening from $9 per tonne backwardation on Wednesday.

In addition, the continued draw from the LME’s copper inventory remains in effect amid supply concerns, with this morning’s LME data showing a fresh cancelation of some 10,225 tonnes predominantly out of LME-registered warehouses in Rotterdam.

LME-registered warehouses in Rotterdam now hold just 10,150 tonnes on-warrant, down from 67,225 tonnes on-warrant at the start of July.

“The spreads are still tightening and there is now some 60,000 tonnes of free copper in [LME-registered] warehouses, which is a day or so of global consumption that would normally trigger a sharp rally,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning note.

Other highlights
  • In other commodities, Brent crude oil futures were up by 1.26%, recently trading at $44.96 per barrel.
  • The West Texas Intermediate (WTI) was recently at $42.25 per barrel, an incline of 0.85%.
  • In a light day for economic data, the German Gfk consumer climate index was recorded at -0.3, beating an expected level of -4.6.
  • Later, the United States will release data on unemployment claims and the Conference Board leading index.

Hassan Butt

hassan.butt@fastmarkets.com

Published

Hassan Butt

July 23, 2020

10:32 GMT

London