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LONDON: Lead jumped to its highest in six weeks on Monday, helped by a weaker dollar and falling inventories, but U.S-China trade tensions kept pressure on most metals.
Benchmark lead ended 1.6 percent higher at $2,085 per tonne, after touching its highest since Sept. 4 at $2,116. The metal fell to its lowest in two years on Thursday at $1,876.
“There is a little bit of focus on the lack of available inventory with the China import arbitrage being so open for so long,” said Colin Hamilton, head of commodities research at BMO Capital Markets.
He was referring to the price difference between Shanghai copper futures and LME prices that determines whether shipments to China are profitable.
But concerns remained over the negative impact on metals from tit-for-tat trade tariffs between top consumer China and the United States despite China’s September trade data proving more resilient than expected last week.
“The rhetoric will escalate and de-escalate. On the whole it’s hurting confidence …so far there is limited evidence of impact on actual demand in falling industrial production growth rates,” BMO’s Hamilton said.
LEAD SPREADS: The premium of cash lead over three-month lead rose to $17 a tonne from a discount of $26.75 nearly a week ago, indicating a shortage of material for immediate delivery.
LEAD STOCKS: On-warrant stocks of lead in LME-approved warehouses dipped 2,550 tonnes to 65,550 tonnes while stocks in ShFE warehouses dipped to 11,172 tonnes, their lowest since early July.
RISK OFF: Market appetite for risk declined as stocks were sold off after many Western companies cancelled plans to attend a Saudi investor conference over the disappearance of a Saudi journalist. Metals are also considered “risky” assets.
DOLLAR: The U.S. currency eased against a basket of major currencies. A weaker greenback makes dollar-denominated commodities cheaper for non-U.S. firms, a relationship used by funds to generate buy and sell signals.
CHINA: China’s unwrought copper imports surged to their highest in 2-1/2 years in September, while copper concentrate imports climbed to an all-time high as the world’s top copper consumer’s crackdown on scrap leaves it needing other forms of the metal.
COPPER PREMIUMS: Yangshan copper import premiums have been near $120 since late September, levels last seen in 2015 and indicating strong demand.
STOCKS: LME copper stocks have dropped since August as ShFE stocks have climbed, reflecting higher imports to the world’s top metals consumer after a crackdown on waste imports that cut the availability of scrap metal.
PRICES: Copper ended mostly unchanged at $6,301 per tonne, aluminium was down 0.7 percent at $2,027, zinc fell 1.7 percent to $2,599, tin inched up 0.1 percent to $19,145 and nickel shed 0.3 percent to $12,615.
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