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LME - 19 April 2014

Nickel prices were pulling the base metal complex higher this week. There were two factors behind the $1,200 (£720) per tonne rise in the price of three-month nickel, which saw the metal reach its highest levels for 14 months.

The first was a continuing ban on nickel ore exports from Indonesia, while the second was the rising tension in Ukraine and the possibility of escalating economic sanctions against Russia - very relevant with the Russians producing some 12% of the world’s refined nickel.

The bank Goldman Sachs suggested that nickel could reach $20,000 per tonne if Indonesia persisted with its ore export ban.

In New York, copper futures ended at their lowest level in nearly three weeks as MRW went to press amid concerns about the economic slowdown in China, the biggest consumer of the red metal. According to the Wall Street Journal, the contract for May delivery fell six cents, or 2%, on the Comex division of the New York Mercantile Exchange. This was the lowest settlement price since 26 March. It noted that copper prices were down 12% since the start of the year.

During the latest meeting of leaders from the World Bank and International Monetary Fund, European Central Bank president Mario Draghi suggested that the bank could start quantitative easing if the euro continued to strengthen.

A strong euro is one of the factors threatening to tip the eurozone into undesirable deflation.

The markets are always happy to hear talk of printing money because it generally provides funds to boost the prices of investment assets.

The markets were similarly comforted by the minutes of the US Federal Reserve’s open market committee from mid-March, now published, which suggested that loose monetary policy might be carried on longer than had been expected.

Equally, Chinese data showing higher than expected lending and a lower than expected money supply growth was considered to be a sign that the authorities were trying to keep going a slowing economy.

China’s money supply grew 12.1% in March from a year earlier, missing the People’s Bank of China’s target of 13% for the first time since April 2012. The lower money supply figure was being attributed by some analysts to a weaker yuan, which would have reduced capital inflows.

IN DETAIL:

On the London Metal Exchange, aluminium for delivery in three months rose to around $1,872 per tonne earlier this week from $1,845 a about week earlier. Stocks of aluminium in warehouses approved by the exchange eased to 5,344,275 tonnes earlier this week from 5,354,900 a week earlier.

Three month aluminium alloy rose to $1,960 per tonne earlier this week, from $1,915 about a week earlier.  LME stocks stood at 54,560 tonnes earlier this week, down slightly from 54,760 tonnes about a week earlier.

Copper was one of the few to buck the trend.  Three month metal eased to $6,635 per tonne earlier this week from $6,681 per tonne about a week earlier.  LME stocks slipped to 244,950 tonnes earlier this week from 257,775 tonnes about a week earlier. 

Three month lead rose to around $2,100 per tonne earlier this week, up from $2,062 about a week earlier.  LME stocks rose to 202,400 tonnes earlier this week from 202,025 about a week earlier.

Three month nickel climbed to around $17,770 per tonne earlier this week from $16,575 about a week earlier.  LME stocks eased to 279,966 tonnes earlier this week, from 281,946 tonnes about a week earlier.

Three month tin rose to $23,350 per tonne earlier this week from $23,105 about a week earlier.  LME stocks eased to 9,460 tonnes earlier this week, from 9,645 about a week earlier.

Three month zinc rose to around $2,047 per tonne earlier this week, from $2,003 about a week earlier.  LME stocks dipped to 811,225 tonnes earlier this week from 831,700 tonnes a week earlier.

Steel billet’s three month position held at $410 per tonne earlier this week, unchanged from about a week earlier. LME stocks dipped to 12,935 tonnes earlier this week from 13,000 tonnes about a week earlier.

The prospects for continuing quantitative easing also helped precious metals.  Spot gold bullion rose to around $1,311.50 per ounce earlier this week, from $1,301.50 about a week earlier.  Spot silver eased to $19.81 per ounce from $19.91, however, while spot platinum rose to $1,454 per ounce from $1,444.

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