Have non-ferrous metals changed their mind about focusing on the US economy?

On Friday, July 3, the value of the copper contract for delivery in 3 months decreased by more than 1.2% on the London Metal Exchange against the background of low trade turnover, finishing at $6,017 per ton, with a daily maximum of $6,085 per ton and a minimum of $5,987 per ton. The absence of US traders on the eve of the Independence Day celebration affected stock sales – the turnover amounted to slightly more than 12,000 lots. The outflow of metal reached the figure of 4,325 tons, but this practically did not affect the current price dynamics. The total volume of copper reserves currently stands at 206.375 thousand tons, with 110.725 thousand tons. t – according to the warrants. With the return of the volume of open positions to pre–pandemic levels (more than 374 thousand tons), for the first time since May 2019, a situation of an "inverted market" (deportation) arose - with the inverse ratio of spot and three-month quotes.

"Although we believe that "easy money" was earned in this market, we think that the price will continue to rise in the coming months in the current situation with a greater risk appetite due to very favorable financial conditions," analyst Boris Mikanikrezai said in the materials. "We predict that the market will continue to be in the "buy–on-drawdown" mode, in the sense that the current price consolidation should be considered more as a buying potential than a trend change, and this potential may further strengthen with further weakening of quotations."

The cost of nickel was $13,130 per ton at the end of the session, with a daily low of $12,905 per ton. Nickel turnover reached its highest level since June 2, amounting to more than 7,800 lots.

The volatility of the LME price is observed against the background of risk avoidance by traders in this market and weak spot demand for physical nickel, while key sectors such as aerospace, automotive and metallurgy continue to experience problems due to the coronavirus.

At morning trading in Shanghai on July 6, the price of copper and other non-ferrous metals recovered after a serious subsidence in sync with the rise in stock prices and amid hopes for accelerating the recovery of the Chinese economy and new stimulus programs of world governments. As a result, metal price quotes finished at 49090 yuan ($6972.71) per ton (-0.1%).

Meanwhile, securities quotations on Asian markets updated 4-month highs, and shares of Chinese blue chips rose by 4.7% to a 5-year high, amid expectations of a revival of economic activity in China, despite the difficult situation with coronavirus in the United States.

"Everything is bad in the West, except for shifts in employment in the United States. Metal prices have gone up on fundamental demand in emerging economies and against the backdrop of a weakening US dollar," said one of the Singapore traders, adding that the market is waiting for more stimulus measures from the US authorities.

Nickel on ShFE rose by 2.6% to 107.030 thousand yuan per ton. Aluminum quotations increased by 1.1% to 14.145 thousand yuan per ton.

Operational summary of the site Metaltorg.ru according to metal prices on the world's leading exchanges at 11:03 Moscow time on 07/06/2020:

on LME (cash):
aluminum – $1587.5 per ton,
copper – $6099 per ton,
lead – $1785.5 per ton,
nickel – $13182 per ton,
tin – $17090 per ton,
zinc – $2038.5 per ton;

on the LME (3-month contract):
aluminum – $1619 per ton,
copper – $6092.5 per ton,
lead – $1799.5 per ton,
nickel – $13235 per ton,
tin – $17030 per ton,
zinc – $2049.5 per ton;

for ShFE (delivery July 2020):
aluminum – $2039 per ton,
copper – $6954.5 per ton,
lead – $2107.5 per ton,
nickel – $15038 per ton,
tin – $20124.5 per ton,
zinc – $2384 per ton (including 17% VAT);

 for ShFE (delivery September 2020):
aluminum – $1964.5 per ton,
copper – $6933 per ton,
lead – $2059.5 per ton,
nickel – $15108.5 per ton,
tin – $20160 per ton,
zinc – $2374.5 per ton (including 17% VAT);

at NYMEX (delivery July 2020): copper – $6054 per ton;
at NYMEX (delivery October 2020): copper – $6078 per ton. 
    
Source: MetalTorg.Ru

16.07.2020