Base metals prices on LME rise by up to 3.2% amid China stimulus speculations

Base metals prices on the London Metal Exchange (LME) experienced notable gains on Tuesday, 23 January, fuelled by speculations surrounding potential stimulus measures in China. Aluminium, in particular, saw a substantial rise of 3.2%.

Three-month aluminium futures gained by 3.2% to settle at $2,228/tonne (t), nickel prices rose by 1.9% to $16,306/t, copper prices settled at $8,405/t (up 0.7%), zinc edged up by 2.6% to $2,519/t and lead increased by 2% to $2,167/t.

Stocks at LME registered warehouses witnessed outflows barring copper, which saw an inflow of 1.8% to 159,575 t from 156,750 t.

COMEX market

Copper prices on the Commodity Exchange (COMEX) rose slightly by 0.8% to $8,337/t compared to $8,271/t in the previous closing.

India's non-ferrous market

Aluminium

The imported aluminium scrap market faced challenges with fluctuating prices influenced by declining futures, elevated freight rates, and bid-offer disparities. Despite robust demand for aluminium Tense scrap, material shortage persists.

Increased copper prices impacted scrap prices from the US, pushing prices higher by $30/t. Concerns over a $40-50/t disparity among aluminium scrap grades and reduced demand from major OEMs contributed to the slow pace in finished aluminum sales.

In the domestic market, there is heightened demand for scrap, but supply remains limited.

Copper

Copper prices in India remained firm yesterday. Armature scrap prices stood at INR 667,000/t and secondary rods prices were at INR 710,000/t, both ex-Delhi. Copper prices on the MCX stood at INR 716,000/t, range-bound d-o-d.

Zinc

BigMint's assessment for Middle East-sourced zinc diecast (5%) stood at $1,910/t CFR Mundra, down w-o-w. Despite sellers quoting higher by $25-$40/t, buyers remained firm at $1,900-1,910/t. UAE-origin material may see an increase in bids by $5-$7/t, as per industry sources.

Global updates

Japan: Record exports but manufacturing contraction continues

Japan's exports reached record highs in December 2023, surging 9.8% to JPY 9.65 trillion, beating a 9.1% estimate. Shipments to the US hit their strongest level ever, rising 20.4% for the 27th consecutive month. China, Japan's largest trading partner, saw a 9.6% increase in Japanese exports, the first in over a year. Japan's 2023 trade deficit shrank by 54.3%.

In January, Japan's manufacturing sector contracted for the eighth consecutive month, with the au Jibun Bank flash manufacturing PMI at 48.0, just above December's 47.9. Despite continued contraction in output and new orders, there were signs of stabilisation. Meanwhile, the services sector expanded, with the flash services PMI rising to 52.7. The composite PMI increased to 51.1.

Unemployment rates increase in 15 US states

In December, unemployment rates rose in 15 US states, with Massachusetts and Rhode Island seeing a 0.3 percentage point increase. Nonfarm payroll employment levels remained stable across all states. Maryland and North Dakota had the lowest jobless rates at 1.9%, while Nevada had the highest at 5.4%.

Funds turn bearish on copper

Funds are adopting a bearish stance on the copper market, focusing on weak global demand rather than supply-chain challenges. Money manager positions on the CME's copper contract shifted from net long to the largest net short since mid-2022, aligning with copper's recent price decline on the LME. Despite supply-side developments, including smelter challenges and mine closures, fund managers remain concerned about the demand outlook amid global economic weakness.

Rio Tinto invests in renewable energy future

Rio Tinto is set to purchase all electricity from the 1.1GW Upper Calliope Solar Farm near Gladstone, Australia. The power purchase agreement with European Energy Australia is a significant step toward repowering Rio Tinto's Gladstone operations, including the Boyne aluminium smelter, Yarwun alumina refinery, and Queensland Alumina refinery. The project aims to reduce Rio Tinto's operating carbon emissions by 1.8 million tonnes annually. Construction is targeted to begin in 2025 or 2026.

Oil prices gain

Brent oil futures were marginally up by 0.05% to $79.59 per barrel. Crude oil WTI futures rose by 0.07% to $74.42 per barrel at the time of reporting.

Natural gas prices up

Prices of natural gas were recorded at $2.512/MMBtu, up by 2.53%.

Dollar index

The dollar index, which gauges the value of the greenback in a basket of six different currencies, hovered at 103.44, slightly down by 0.17%.

The rupee was recorded at INR 83.14 against the USD, depreciating marginally against the previous closing.