Market and product

Base metals struggled to maintain their upward momentum on the LME on Friday morning when investors took profits ahead of the long-weekend and after oil prices came off earlier highs.

The Brent crude spot price at peaked $50.49 on Thursday, its highest since November 4, before easing – it was last at $48.83 per barrel, down 1.03 percent on Thursday’s close. Spot Texas light sweet crude broke hit a 7.5-month high of $50.18 on Thursday but was last at $48.78.

The market will now look to weekly rig data from Baker Hughes – in the week to May 20, there was no decline in output for the first time since Mid-March.

“[If] drilling activity has stabilised, this could prompt speculative financial investors to take profits, which in turn would weigh on prices,” Commerzbank noted.

In data today, US GDP and UoM consumer sentiment and inflation expectations are due as is a speech by US fed chair Janet Yellen, which takes on extra significance following a hawkish FOMC statement on US interest rate rises earlier this month. The dollar index remained firm at 95.26.

As well, next week’s Chinese manufacturing PMI data will be closely eyed.

“With much uncertainty ahead with the Brexit vote, the FOMC meeting and with the market hanging on Chinese data again, we would expect a period of nervous trading but taking its lead from Chinese data,” FastMarkets’ William Adams said.

Copper briefly went back above $4,700 and two-week highs at $4,710 but failed to hold on there – it was last at $4,688 per tonne, still up $27 on the previous close.

Stocks fell a net 2,225 tonnes to 153,750 tonnes due predominantly to falls in Singapore. Cancelled warrants were also higher, rising 2,500 tonnes to 50,100 tonnes – almost 4,000 tonnes were freshly cancelled in Johor.

Meanwhile, SHFE copper stocks continued to slide – today’s data showed a 14-percent week-on-week loss to 221,212 tonnes.

“[There are] signs of copper restocking in China as domestically traded copper trades at a small premium to on-exchange and falling Shanghai copper stocks adds some scale-down support,” a trader said.

Aluminium at $1,560 was up $5. Stocks fell 5,900 tonnes to 2,534,000 tonnes while cancelled warrants fell 4,500 tonnes to 1,136,900 tonnes. Spreads have tightened, with the benchmark cash/threes last at a contango of $8 while cash/July was at $1.

Nickel at $8,440 was $45 higher; stocks rose 1,848 tonnes to 402,744 tonnes after more than 3,200 tonnes were delivered into Johor.

Cancelled warrants increased in Kaohsiung to 19,332 tonnes after 6,996 tonnes were freshly cancelled. There has been an on-off scenario playing out at this location – almost 23,000 tonnes have been cancelled this week although 9,930 tonnes of this total have been put back on warrant.

Zinc gained $18 to 1,894 -stocks were down 2,025 tonnes at 383,000 tonnes. Tightness has appeared in spreads, with cash/June at a backwardation of $3.35 and cash/threes at $1. Lead climbed $13 to trade recently at $1,689 after stocks edged 25 tonnes lower to 185,250 tonnes.

Tin at $16,200 was $350 higher although stocks continue to increase, rising a further 70 tonnes to 7,115 tonnes. Steel, cobalt and molybdenum were all neglected.