LIVE FUTURES REPORT 03/08: LME zinc price sinks 1.2% in mixed trading; tin holds on to recent gains

The three-month zinc price on the London Metal Exchange was down during morning trading on Monday August 3, with price action slipping back below the newly-established $2,300-per-tonne support level, while narrower forward spreads helped tin futures retain recent momentum.

Zinc’s outright price on the LME was recently seen at $2,289 per tonne, slipping just over 1% from Friday’s closing price of $2,318.50 per tonne, while turnover was moderate at just over 2,700 lots exchanged as of 9.45am London time.

The galvanizing metal’s LME price spiked above the nearby threshold last week, despite more than 75,000 tonnes of material entering LME-registered warehouses over July. Yet market uncertainty and a lower US dollar index - which recently traded at 93.40 - has seen prices remain volatile.

Forward buying in LME zinc remains supported by positive spreads, however, with the metal’s benchmark cash/three-month spread recently trading at $10.50 per tonne contango, widening from $6.50 per tonne contango last week.

“Copper consolidated recent gains [last week] while the other metals made modest gains supported by a weaker USD and the reflation story that has seen investor demand for hard or real assets; LMEX [LME Index] was flat week on week,” independent commodity analyst Robin Bhar said in a morning note.

“Russian producer, Rusal, said it believes the worst is over for the aluminium market, with signs of better demand in Europe and the US emerging. Nickel was buoyed by positive sentiment, as investors continue to see a positive backdrop for demand from new energy,” he added.

Elsewhere in the complex, the three-month tin price was well-supported over the morning session, recently trading at $17,845 per tonne, albeit falling from a morning high of $17,975 per tonne, while turnover was strong at some 134 lots exchanged as of 10.10am London time.

LME tin stocks continue to trend higher despite a concurrent price rise, with total on-warrant LME tin stocks now standing at 3,830 tonnes, up from 3,120 tonnes at the start of July.

But forward buying in LME tin futures continues to be supported by an easing forward curve, with LME tin’s cash/three-month spread recently trading at $23 per tonne backwardation, narrowing from $90 per tonne backwardation two weeks ago.

Other highlights
  • In other commodities, Brent crude oil futures were down by 1.42%, recently trading at $43.04 per barrel.
  • The West Texas Intermediate (WTI) was recently at $39.71 per barrel, a decline of 1.52%.
  • In economic data from China this morning, the Caixin manufacturing purchasing managers’ index (PMI) for the July period was recorded at a level of 52.8.
  • Later today, the United States will be releasing data on its ISM manufacturing PMI, in addition to construction spending.

Hassan Butt

hassan.butt@fastmarkets.com

Published

Hassan Butt

August 03, 2020

10:40 GMT

London