LME MORNING – Base metals mixed, copper cancellations continue to rise in Asia

Date 8/31/2015 8:41:11 AM Source:

Base metals were mixed in LME premarket trading on Friday, extending a week of volatile trading that started on “Black Monday”, with copper and nickel back below $5,100 and $10,000 respectively.


Further choppiness is likely – today is the last trading day of the month because of Monday’s bank holiday in the UK.


“The metals are continuing in volatile trading ranges and I expect to see much the same for end-of-month positioning. Spread tightness is a feature as shorts have covered of late,” a trader said.


The base metals dropped to fresh multi-year lows this week after the meltdown in Chinese equities triggered fears that the Chinese economy was slowing more than expected


The People Bank of China stepped in on Tuesday and again on Wednesday, announcing stimulus measures in a bid to stem the fears. As the week progressed, a return to strength for equities helped underpin metals prices.


Today, the Shanghai composite index closed at 3,232.349, up 4.82 percent and building on Thursday’s uptick – still, they ended the week down more than eight percent.


In data, the US goods trade balance, the core PCE price index, personal spending, personal income, revised UoM consumer sentiment and revised UoM inflation expectations are due.


In the metals, copper at $5,078 was down $62 on Thursday’s close. Around 8,000 lots have changed hands on Select so far. The recent spate of weak prices has meant that the arbitrage window between the SHFE and the LME has opened, which in turn has seen an increase of cancellations in Asia as material is moved to Shanghai.


Total cancelled warrants rose a net 3,900 tonnes to 56,225 tonnes, with increases predominantly in Singapore and Port Klang as well as Gwangyang and Busan.


In spreads, the benchmark cash/threes was last at a backwardation of $33, while there are also backwardations in the September, October and November dates. LME data continues to show there is one large warrant holder at 50-79 percent across all three reported positions. 


Nickel is back under $10,000, slipping $205 to $9,855. The cash/threes has seen a backwardation bid at $35. Stocks were up 474 tonnes at 255,166 tonnes and cancelled warrants increased 450 tonnes to 163,950 tonnes.


“Even though there are warrants in abundance, many traders are trying to get hold of material, some for consumption but many for financing purposes,” Triland noted.


Aluminium at $1,565 was up $5 after stock decreased 7,550 tonnes to 3,276,075 tonnes. Stocks have fallen more than 44,000 tonnes this week, a similar figure to last week.


Lead was down $6.50 at $1,671.50 although inventories slipped 1,725 tonnes to 187,400 tonnes while zinc at $1,779 was up $27.


Following yesterday’s large increase in cancellations in New Orleans, lea’s nearby spreads have tightened – cash/threes was at slight contango of $1.50. This morning, stocks and cancelled warrants were both down 2,000 tonnes at 522,875 tonnes and 149,675 tonnes respectively.


Tin at $13,800 was $90 lower but its spreads remain backwardated – cash/threes was last at $100. Stocks dropped 380 tonnes to 6,980 tonnes and cancelled warrants fell 350 tonnes to 2,170 tonnes.


Steel, cobalt and molybdenum were, neglected with no changes to stocks.





Edited by SHMET