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09.12.2016

Copper, ali prices supported by robust Chinese data and dip buying

Copper, ali prices supported by robust Chinese data and dip buying

Base metals found support from a softer dollar and dip buying during LME trading on the morning of Thursday December 8.

Prices had slipped in the previous session but the release of robust Chinese data has since lifted sentiment for copper and aluminium, triggering some buying on the dips.

China’s trade balance undershot overall at 298 billion yuan against an expected 307 billion yuan. But exports and imports both climbed in November, suggesting a pick-up in both domestic and global demand.

China’s CPI and its PPI numbers are also scheduled for release later today. In other data, the EU will release its minimum bid rate while the USA has unemployment claims of note.

“Yesterday’s sell-off in the afternoon saw most metals settle in the red near the lows of the session. This appeared to be driven by some special notices on SHFE, illustrating the clampdown of Chinese authorities on excessive spec trading,” Marex Spectron said in a research note.

“Fears around further Chinese ‘control’ measures coupled with year-end fast approaching may lead to some risk reduction. But we have noted evidence of consumer buying on some of these metals over the past few sessions already,” it added.

The three-month copper price recently traded at $5,823 per tonne, up $43 on Wednesday’s close.

Stocks fell a net 4,800 tonnes to 221,125 tonnes and cancelled warrants rose 2,750 tonnes – available material at 109,675 tonnes is now at its lowest since June.

Nearby spreads remained tight, reflecting dwindling availability in LME-listed warehouses – cash/Dec was at a backwardation of $2 per tonne, cash/Jan at $4.70 and Dec/Jan at $1.

There is also some tightness further along the forward curve – the Dec 17/Dec 18 date was at a backwardation of $16, although this has eased from above $20 yesterday.

The three-month aluminium price recently traded at $1,724 per tonne, an increase of $17. Stocks and cancelled warrants both fell 5,850 tonnes to 2,107,525 tonnes and 722,650 tonnes respectively.

China exported 4.2 million tonnes of aluminium products from January to November, a year-on-year drop of 3.1%.

The three-month zinc price at $2,759 per tonne was up $19; stocks were little changed, slipping 375 tonnes to 438,975 tonnes. The three-month lead price at $2,325 per tonne was $4 higher, with no change to stocks.

The three-month nickel price at $11,405 per tonne was down $5; stocks were unchanged. The three-month tin price fell $40 to $21,060 per tonne after stocks increased 165 tonnes to 3,350 tonnes.

Steel, cobalt and molybdenum were neglected. Cobalt stocks rose 19 tonnes to 652 tonnes.