Base metals focus on warehouse issues

The base metals were mixed again yesterday with the aluminium price putting in the strongest performance with a 0.9 percent rise to $1,848, while the nickel price was the weakest with a 0.6 percent drop to $19,032. While other markets reacted positively to the ECB’s new measures, the base metals were generally under pressure most of the day, but they did get some lift towards the close – the copper price closed little changed at $6,783.

In Asian trading this morning the base metals have generally eased with prices off an average of 0.2 percent on light volume of 3,825 lots as of 06:03 BST. Copper and lead are off the most with 0.4 percent losses to $6,755 and $2,094.75, the nickel pricxe is little changed at $19,039 and the aluminium price is off 0.2 percent at $1,844.

In Shanghai, the base metals are up moderately with the copper and aluminium price both up 0.3 percent at Rmb 48,200 and Rmb 13,355, the zinc price is up 0.1 percent at Rmb 15,185 and lead is unchanged at Rmb 14,010. Steel rebar is up one percent at Rmb 3,044, while iron ore is trading around $94.30.

Spot copper in Changjiang is up 0.1 percent at Rmb 49,850-50,200, which puts the backwardation with the futures at an equivalent of some $320/tonne, while the LME/Shanghai copper arb ratio has moved out to 1:7.13, which is getting closer to re-opening.

Our view on the base metals is for more of the same, in that we feel prices will consolidate at lower numbers as the market ignores the macro economic developments and focuses on what is happening in China, both at the warehouse level and in the wider economy. Copper prices managed to not react to news that Newmont mining declared force majeure on concentrate shipments and has suspended operations at its Batu Hijau mine in Indonesia due to export restrictions. The one metal holding up better than the others is aluminium.