Market and product

Base metals were consolidating in Wednesday’s LME premarket, which is typically the case ahead of keenly awaited data from China and the US.

China will release its manufacturing PMI data on Thursday while blockbuster US non-farm payrolls are scheduled for Friday. Market participants are increasingly convinced the US Fed will raise interest rates in September, which should push the dollar higher. A stronger greenback would weigh on commodities denominated in the US currency.

Data from the EU disappointed today. The CPI flash estimate and core CPI flash data both undershot at 0.2 percent and 0.8 percent respectively. The eurozone unemployment rate was 10.1 percent.

The US has ADP non-farm payrolls – often seen as a precursor to Friday’s numbers – while the Chicago PMI and pending home sales are also of note.

“The dollar will remain a key driver for market direction in the near term while markets adjust expectations for the trajectory of US interest rates. Trade conditions are likely to remain slow due to month-end book squaring and ahead of the US Labor day holiday on Monday,” FastMarkets analyst James Moore said.

In the metals, copper at $4,636 per tonne was up $29 on Tuesday’s close, having yesterday hit fresh month lows when it attempted – but failed – to break below $4,600.

News of two copper mine suspensions in Chile due to fatalities has underpinned the market – Chuquicamata, Codelco’s second-biggest operation, closed yesterday while a fatality at the El Abra copper mine, which is majority-owned by Freeport-McMoRan, has halted some operations.

Stocks continue to climb in LME-listed warehouses in Asia, rising a net 10,300 tonnes to 293,525 tonnes, the bulk of which went into Port Klang and Singapore although there were also arrivals in Kaohsiung, Gwangyang and Chicago.

Aluminium at $1,622 was down $8 after cancellations fell 18,675 tonnes to 898,925 tonnes, including an 11,775-tonne decline in Vlissingen. Stocks fell 5,450 tonnes to 2,234,050 tonnes.

Zinc is holding above $2,300 but at $2,307 it was down $4 – its cash spreads remain tight, with the benchmark cash/threes last at a backwardation of $5.25. Stocks and cancelled warrants both slipped 1,350 tonnes to 451,950 tonnes and 23,025 tonnes respectively.

Nickel at $9,825 was $5 lower; stocks fell 744 tonnes to 370,116 tonnes. Lead at $1,884 was up $6, with stocks and cancelled warrants both 425 tonnes lower at 187,300 tonnes and 67,375 tonnes respectively.

Tin at $18,775 tonnes was down $24 even after stocks fell 425 tonnes to 4,460 tonnes. The slide in inventories is keeping the spreads tight, with cash/threes last at a backwardation of $20.

Steel, cobalt and molybdenum were neglected. Molybdenum stocks are now at fresh lows after falling six tonnes to just 12 tonnes.

fastmarket