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London Metal Prices See Gain; Softer Dollar More Attractive

May 2, 2024

2nd May 2024 – In this latest trading session, non-ferrous metals on the London Metal Exchange witnessed varying degrees of price increases, primarily driven by a dip in the U.S. dollar. This depreciation has made metals priced in dollars more affordable for holders of other currencies.

Copper, a major indicator of economic health, rose by 0.4% to $9,939.50 per metric tonne by early GMT. Similarly, aluminium edged up by 0.3% to $2,585, and nickel increased slightly by 0.1% to $18,905. Tin showed a meaningful rise of 1.6%, reaching $31,080.

Contrast in Zinc and Lead Prices

While most metals saw increases, LME zinc fell slightly by 0.1% to $2,877 per ton, and lead prices remained unchanged at $2,180 per tonne. These movements suggest a more mixed sentiment in the metals market, possibly influenced by specific industrial demand and supply nuances.

Dollar Weakness

The recent softening of the dollar came after the Federal Reserve’s signals of an inclination toward reducing interest rates in the future, although with a cautious approach to wait for more definite signs of falling inflation. This has prompted investors to adjust their positions in dollar-priced assets, including metals.

The session’s trading volumes were reportedly thin, attributed to Labour Day, a public holiday in China, the top consumer of many metals. Not surprising, as activities in China often have a pronounced impact on global metals markets due to the country’s consumption levels.

China’s Export Plans

Chinese copper producers are also reportedly planning to export up to 100,000 metric tonnes of copper, marking the largest export volume in 12 years.

This strategy aims to mitigate the recent price rally that has been pushing copper prices toward record highs, potentially reshaping the copper supply landscape.

Aluminium stocks in LME-approved warehouses have dropped to their lowest level (Aluminum Report 2022​ (CFTC)​.) since at least 1998, totaling 131,375 tonnes. The surge in cancelled warrants, which increased by 82% in just over two weeks, indicates robust demand and tightening supply, further evidenced by the shift of aluminium’s tom-next into backwardation, suggesting immediate supply shortages.

Last month, LME aluminium prices recorded a 10.9% rise, their best monthly gain since January 2023, driven by concerns over supply disruptions due to sanctions on Russian metals and optimism around China’s economic recovery. This backdrop sets a complex stage for metal traders and investors, who must navigate both geopolitical and economic uncertainties in their market strategies.

As the dynamics of the metals market continue to evolve, influenced by geopolitical events, economic policies, and shifts in currency values, now is a pivotal time for traders to engage.

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