Base metals are generally weaker on the London Metal Exchange this week. On Tuesday 7th March, the three-month prices were down at an average of 0.4%; led by a 0.8% fall in nickel prices to $10,985 per tonne. Copper is the only metal bucking the trend, it is up 0.2% at $5,868 per tonne.
This morning’s general weakness follows a weaker performance on Monday when metals were down an average of 0.6%. Volume this morning has been average with 5,379 lots traded as of 06:22 GMT.
In Shanghai this morning, the base metals trading on the Shanghai Futures Exchange are down across the board with average losses of 1.2%, led by a 2.1% drop in lead prices, zinc prices are down 1.7%, aluminium prices are down 1.4% and copper prices are off 0.9% at 47,710 yuan per tonne. Spot copper prices in Changjiang are off 1% at 47,410-47,560 yuan per tonne and the LME/Shanghai copper arb ratio is at 8.14.
The base metals remaining on a weaker footing is likely down to the reduction in China’s growth target but underlying tails on Monday’s chart candlesticks did suggest bargain hunting and nickel managed to avoid the weakness in the previous day’s trade. However, while equities in Asia are buoyant, the improved sentiment has not flowed through to the base metals yet – we wait to see if it does as European trading gathers momentum. Support on copper is seen at $5,835 per tonne. Overall we expect dips to remain supported as underlying sentiment still seems to be bullish for the metals and it seems that although the market expects a US rate rise later next week, the fact the USA feels strong enough to raise rates is being seen as a positive sign.
Source: FastMarkets, 2017