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LME Metals Report
Written by Edward Meir – Commodity Research Group
Tel: 1-203-656-1143 • emeir@edfmancapital.com
WWW.EDFMANCAPITAL.COM
=================================================================================
This commentary was written at 9:30 a.m. on July
16, 2021 US EST.
Metals rolled back earlier gains and are now trading
mostly mixed. Today's prominent movers are nickel
and tin, both up on the day, with tin coming within
$10/ton of taking out its all-time high of $33,600/ton.
Nickel is at a five-month high and briefly took out the
$19,000/ton mark as well. Chinese stainless demand
remains strong and is driving nickel higher. In fact,
Chinese stainless steel futures surged more than 6%
overnight to set another record as concerns over
output cuts remain a concern amid a strong demand
backdrop. On that latter point, China’s Mysteel
reported that weekly apparent consumption for five of
China's main steel products rose almost 4% to 10.77
million tons this past week. Other steel prices on
Shanghai ended mixed overnight; October rebar
futures closed up by .2%, but iron ore futures rose 2%,
partly in response to Rio Tinto’s disappointing guidance with regard to its full year shipments.
We are seeing some selling setting in over the precious metal space; gold is off $5.20 an ounce right now at
$1823/ounce, while silver is off $.22 at $26.17. Platinum is off $11/ounce at $1127, while palladium continues to
add to earlier losses, down another $24/ounce at $2705.
After two days of steep losses, oil prices are coming up for air right now, up about $.20 on each of the two crude
contracts. Still, crude is on track for its worst weekly showing since May. Although the global macro picture
remains one of recovery, COVID infections are pulling in the other direction and complicating the demand
outlook. In fact at the Biden/Merkel news conference held on Thursday at the White House, Mr. Biden was asked
once again when travel bans will be lifted on Europeans coming to the US, something that the German
Chancellor was pressing him on as well. Biden said that a US answer should be coming over the next few days
as the White House Covid team continues to plan out that contingency.
On a separate note, we suspect that the German Chancellor is watching the increasingly serious flooding
situation in Western Germany with alarm; the number of people who have now died in floods in the western part
of the country rose to 103, bringing the total death toll in Western Europe to at least 117. Belgium reported 14
fatalities as well.
In the currency markets, the general dollar index has just ticked higher on better-than-expected US retail sales
numbers for June; these came out at+.6% (versus a -.6% expected) while the ex-auto number rose by a more
impressive 1.3% versus the .3% expected. The yen is getting hurt the most right now, down about half a yen at
110.25. The Euro was also slipped, now trading back below 1.18, while sterling is at 1.3818.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Edward Meir/Commodity Research Group (“CRG) is an independent consultant to E D & F Man Capital Markets Inc. (“MCM ”) focusing on metals commentary. Neither Edward Meir or CRG have a
personal futures trading accounts. The information contained in this material should be construed as market commentary, merely observing economic, political and/or market conditions, and not
intended to refer to any particular trading strategy, or specific trade recommendation, promotional element or quality of services provided by MCM Inc. or E D & F Man Derivatives Products Inc.
(“MDP”). Trading ranges given are not a reason to buy, sell or hold any commodity mentioned. MCM and MDP are not responsible for any redistribution of this material by third parties, or any
trading decisions taken by persons not intended to view this material. Information contained herein was obtained from sources believed to be reliable but is not guaranteed as to its accuracy.
These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and any trading strategy employed by MCM or MDP. This is not an offer to buy or
sell any derivative. The information and data provided is not tradable and is for indication-only purposes. All references to and discussion of OTC products or swaps are made solely on behalf of
MDP, a member of the NFA and provisionally registered with the CFTC as a Swap Dealer. MDP’s products are designed only for individuals or firms who qualify under CFTC rules as an ECP and
who have been accepted as customers of MDP. The trading of derivatives such as futures, options and OTC products or swaps may not be suitable for all investors. Derivative trading involves
substantial risk of loss, and you should fully understand those risks prior to trading.================================================================================
The retail report is setting up a firmer tone for US equities; Dow futures are expected up 60 points, while the S&P
500 and NASDAQ are each called up by 10 points and 40 points respectively. We are not seeing much going on
in the US Treasury markets, with the 10 year at 1.32%, while the two-year rate is unchanged at .23%.
Other macro numbers out on Thursday include the Empire State manufacturing survey (rising to 43 in July
consensus 18.0), while the July Philadelphia Fed index decreased to 21.9 (consensus 28.3). Fed Chair Powell
also testified in front of Congress for a second day on Thursday, but his remarks basically mirrored what was
said earlier.
Out of Washington, Senate Majority Leader Chuck Schumer will set up a procedural vote for next Wednesday so
that a $1.2 trillion bipartisan infrastructure bill could be voted on. The measure will need 60 Senate votes to pass.
Following that, Schumer intends to bring a $3.5 trillion package to committee where once it emerges as a bill, it
will need 51 votes to pass in the form of a budget reconciliation measure given that no Republicans will vote for
it. We should note that the original proposal was a mind-boggling $6 trillion and so has been scaled down. The
new measure will include more money allocated for infrastructure, climate change initiatives, Medicare
expansion, and an array of other items, all funded by a slew of corporate and capital gains taxes, along with new
tariffs on countries that do not have aggressive climate change policies in place.
In macro news out of Japan, the BoJ cut its fiscal growth forecast on Friday and now expects the economy to
expand 3.8% in the current fiscal year (ending in March 2022), down from 4.0% projected in April. But it revised
its growth forecast for next year to 2.7% from 2.4%. The bank also revised its consumer inflation forecast for the
current fiscal year to 0.6% from 0.1%. It left its yield curve control target unchanged. Meanwhile, with the
Olympics only days away, athletes and staff on at least seven teams have either come down with Covid or are
under isolation following exposure to Japanese staff that have tested positive for it.
Things remain tense between the US and China; Washington issued an advisory to US businesses operating in
Hong Kong after China's imposition of a new national security law, warning them that they are now subject to
Chinese national security laws, while they also face increased risks of electronic surveillance without warrants.
"Developments over the last year in Hong Kong present clear operational, financial, legal, and reputational risks
for multinational firms," a senior Biden administration official was quoted as saying. For its part, China has
refused to grant Wendy Sherman, deputy Secretary of State, a meeting with her counterpart, instead proposing
that she meets the number five foreign ministry official who is responsible for US affairs. China earlier this year
rebuffed several requests for the US Defense Secretary to meet his Chinese counterpart.
In exchange news, the LME plans to start trading six new contracts next week: European aluminum premiums,
US aluminum scrap, lithium hydroxide, European hot rolled steel, steel scrap in India and steel scrap in Taiwan.
Stay tuned.
=========================================================================================================================================
Edward Meir/Commodity Research Group (“CRG) is an independent consultant to E D & F Man Capital Markets Inc. (“MCM ”) focusing on metals commentary. Neither Edward Meir
nor CRG have a personal futures trading accounts. The information contained in this material should be construed as market commentary, merely observing economic, political
and/or market conditions, and not intended to refer to any particular trading strategy, or specific trade recommendation, promotional element or quality of services provided by MCM
Inc. or E D & F Man Derivatives Products Inc. (“MDP”). Trading ranges given are not a reason to buy, sell or hold any commodity mentioned. MCM and MDP are not responsible for
any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material. Information contained herein was obtained from
sources believed to be reliable but is not guaranteed as to its accuracy. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the
viewpoints and any trading strategy employed by MCM or MDP. This is not an offer to buy or sell any derivative. The information and data provided is not tradable and is for
indication-only purposes. All references to and discussion of OTC products or swaps are made solely on behalf of MDP, a member of the NFA and provisionally registered with the
CFTC as a Swap Dealer. MDP’s products are designed only for individuals or firms who qualify under CFTC rules as an ECP and who have been accepted as counterparties of MDP.
The trading of derivatives such as futures, options and OTC products or swaps may not be suitable for all investors. Derivative trading involves substantial risk of loss, and you should
fully understand those risks prior to trading.================================================================================
------------------------------------------
COPPER -- SUPPORT: $9,236 / RESISTANCE: $9,632
We are at $9,462, down $25. We have been trading between $9,418–$9,507.
------------------------------------------
ALUMINUM -- SUPPORT: $2432 / RESISTANCE: $2581
We are at $2513, down $4. We have been trading between $2508–$2529.
* Alcoa beat its earnings estimate by $0.18 a share for Q2 (at $1.49, excluding non-recurring items) and
came in ahead of the $1.31 consensus estimate as well. Revenues rose nearly 32% year/year to $2.83 bln
vs the $2.64 consensus. The company expects a strong year in 2021 based on the ongoing global recovery
which the company says short increase aluminum demand for all end products. However, Alcoa did note
that it expects to see rising prices for its raw materials and energy, both being a potential threat to margins.
(Shares are up $.86 in premarket trading).
* Fastmarkets reports that Ball Corporation will be building new can-making plants in the East Midlands
region of the UK and in Western Russia. The UK plant will be Ball’s third can manufacturing facility in the
country, while its proposed Russian facility will be its fourth. Earlier this year, Ball said that it would build a
new can-making plant in the Czech Republic where operations are expected to begin in October 2022.
* Fastmarkets cites a source close to Rusal as saying that some of the duty levied on the company by the
Russian government will inevitably be passed on to customers, although it is still not determined how much
that would be. One consumer told FM that in his view the pass-through would be about 7%-9% of the duty.
“It’s all contingent on demand. If the marginal unit is required to be a Russian unit, and that’s the most
expensive, then you can see that driving premiums upward. But if the demand picture is that they don’t need
the Russian tonnes, then those are super-expensive units that people won’t pay for.” a trader was quoted as
as saying.
------------------------------------------
ZINC -- SUPPORT: $2905 / RESISTANCE: $3075
We are at $2986, up $17. We have been trading between $2959–$2998.
------------------------------------------
LEAD -- SUPPORT: $2264 / RESISTANCE: $2344
We are at $2323, down $6. We have been trading between $2316–$2333.
* SHFE lead inventories rose by 17,000 tons this past week; there were minor changes in the rest of the
metals.
=========================================================================================================================================
Edward Meir/Commodity Research Group (“CRG) is an independent consultant to E D & F Man Capital Markets Inc. (“MCM ”) focusing on metals commentary. Neither Edward Meir
nor CRG have a personal futures trading accounts. The information contained in this material should be construed as market commentary, merely observing economic, political
and/or market conditions, and not intended to refer to any particular trading strategy, or specific trade recommendation, promotional element or quality of services provided by MCM
Inc. or E D & F Man Derivatives Products Inc. (“MDP”). Trading ranges given are not a reason to buy, sell or hold any commodity mentioned. MCM and MDP are not responsible for
any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material. Information contained herein was obtained from
sources believed to be reliable but is not guaranteed as to its accuracy. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the
viewpoints and any trading strategy employed by MCM or MDP. This is not an offer to buy or sell any derivative. The information and data provided is not tradable and is for
indication-only purposes. All references to and discussion of OTC products or swaps are made solely on behalf of MDP, a member of the NFA and provisionally registered with the
CFTC as a Swap Dealer. MDP’s products are designed only for individuals or firms who qualify under CFTC rules as an ECP and who have been accepted as counterparties of MDP.
The trading of derivatives such as futures, options and OTC products or swaps may not be suitable for all investors. Derivative trading involves substantial risk of loss, and you should
fully understand those risks prior to trading.================================================================================
------------------------------------------
NICKEL -- SUPPORT: $17,930 / RESISTANCE: $19,250
We are at $18,940, up $172. We have been trading between $18,685–$19,205.
* Fastmarkets reports that Glencore is warning of force majeure steps it may need to take amid mounting
South African unrest. Notices from the company have apparently been sent to cobalt, chrome ore, ferro-
chrome, manganese ore and vanadium customers. Prices for the underlying commodities have yet to react,
although they are bound to do so if the unrest continues.
------------------------------------------
TIN -- SUPPORT: $30,000 / RESISTANCE: $33,600
We are at $33,510, up $380. We have been trading between $33,225–$33,590.
=========================================================================================================================================
Edward Meir/Commodity Research Group (“CRG) is an independent consultant to E D & F Man Capital Markets Inc. (“MCM ”) focusing on metals commentary. Neither Edward Meir
nor CRG have a personal futures trading accounts. The information contained in this material should be construed as market commentary, merely observing economic, political
and/or market conditions, and not intended to refer to any particular trading strategy, or specific trade recommendation, promotional element or quality of services provided by MCM
Inc. or E D & F Man Derivatives Products Inc. (“MDP”). Trading ranges given are not a reason to buy, sell or hold any commodity mentioned. MCM and MDP are not responsible for
any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material. Information contained herein was obtained from
sources believed to be reliable but is not guaranteed as to its accuracy. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the
viewpoints and any trading strategy employed by MCM or MDP. This is not an offer to buy or sell any derivative. The information and data provided is not tradable and is for
indication-only purposes. All references to and discussion of OTC products or swaps are made solely on behalf of MDP, a member of the NFA and provisionally registered with the
CFTC as a Swap Dealer. MDP’s products are designed only for individuals or firms who qualify under CFTC rules as an ECP and who have been accepted as counterparties of MDP.
The trading of derivatives such as futures, options and OTC products or swaps may not be suitable for all investors. Derivative trading involves substantial risk of loss, and you should
fully understand those risks prior to trading.Base Metals Prices and Forward Curve Snapshot
LME Cash 16-Jul-21 Prev Day Month ago 3M Trend 12M Trend
CU ($/MT) 9,452 9,303 9,638
AL ($/MT) 2,501 2,507 2,473
PB ($/MT) 2,322 2,291 2,186
ZN ($/MT) 2,955 2,909 3,013
NI ($/MT) 18,765 18,575 17,619
SN ($/MT) 33,810 33,651 32,660
LME Frwrds Cash 3-month 15-month 27-month 63-month Curve's shape
CU ($/MT) 9,452 9,441 9,496 9,476 9,295
AL ($/MT) 2,501 2,519 2,503 2,479 2,449
PB ($/MT) 2,322 2,326 2,311 2,310 2,320
ZN ($/MT) 2,955 2,980 2,960 2,911 2,851
NI ($/MT) 18,765 18,955 18,791 18,847 19,179
SN ($/MT) 33,810 33,400 29,590
SHFE Front 1 month 3 month 6 month 9 month 12 month Curve's shape
CU (CNY/T) 69,210 69,370 69,630 70,050 69,830
AL (CNY/T) 19,495 19,470 19,380 19,300 19,235
PB (CNY/T) 15,925 16,055 16,195 16,320 16,245
ZN (CNY/T) 22,290 22,245 22,145 21,850 21,760
NI (CNY/T) 140,830 139,970 139,710 138,080
SN (CNY/T) 225,520 220,810 215,790 210,350 205,940
Base Metals Inventories
Copper Today 1 day ∆ 1 month 6 month Yr Ago 12M Trend
LME (MT) 224,175 1,550 142,625 99,950 159,800
SHFE (MT) 113,593 180,967 73,685 137,336
COMEX (MT) 41,118 -248 49,063 70,252 79,612
GLOBAL(MT) 378,886 1,302 372,655 243,887 376,748
Aluminum Today 1 day ∆ 1 month 6 month Yr Ago 12M Trend
LME (MT) 1,457,800 -7,975 1,627,225 1,288,675 1,668,525
SHFE (MT) 265,945 294,135 237,143 213,650
COMEX (MT) 26,257 -90 27,221 40,925 35,258
GLOBAL(MT) 1,750,002 -8,065 1,948,581 1,566,743 1,917,433
Lead Today 1 day ∆ 1 month 6 month Yr Ago 12M Trend
LME (MT) 67,500 -225 88,025 129,800 63,050
SHFE (MT) 150,301 118,885 50,811 27,038
GLOBAL(MT) 217,801 -225 206,910 180,611 90,088
Zinc Today 1 day ∆ 1 month 6 month Yr Ago 12M Trend
LME (MT) 248,725 -200 265,375 198,700 122,525
SHFE (MT) 30,053 56,582 43,177 91,307
COMEX (MT) 2,699 0 2,699 2,699 182
GLOBAL(MT) 281,477 -200 324,656 244,576 214,014
Nickel Today 1 day ∆ 1 month 6 month Yr Ago 12M Trend
LME (MT) 223,248 -624 239,838 249,306 234,960
SHFE (MT) 7,797 7,471 14,282 29,495
GLOBAL(MT) 231,045 -624 247,309 263,588 264,455
Source: EDF Man Capital Markets/ BloombergTechnical Profile
16-Jul-21 1 day 1 month ago 3 month ago Yr ago
Volume (3-Mnth/lots)
CU 15,337 24,706 29,358 52,317 36,757
AL 12,634 21,445 29,372 37,260 55,387
PB 4,487 9,599 16,698 10,887 11,038
ZN 6,295 15,112 16,477 23,218 18,935
NI 6,219 13,535 14,857 17,929 18,614
SN 277 611 425 292 633
Open Int (3-Mnth/lots)
CU 304,519 302,927 310,831 286,964 310,473
AL 676,853 679,497 684,711 790,983 667,276
PB 127,641 127,734 120,954 105,662 108,520
ZN 259,150 259,831 256,589 191,756 229,431
NI 219,294 219,027 212,471 201,811 277,215
SN 11,651 11,561 11,205 16,173 16,093
Moving Averages & Implied Price Direction
Cash 10 MAV 40 MAV 100 MAV 200 MAV
CU ↓ 9,452 9,381 9,629 9,476 8,481
AL ↑ 2,501 2,497 2,449 2,351 2,152
PB ↑ 2,322 2,307 2,220 2,106 2,027
ZN ↔ 2,955 2,930 2,950 2,885 2,769
NI ↑ 18,765 18,491 17,993 17,364 17,021
SN ↑ 33,810 33,057 32,560 30,213 25,326
Support & Resistance
S1 S2 R1 R2 RSI
CU 9,236 9,011 9,632 9,733 49
AL 2,432 2,410 2,581 2,603 54
PB 2,264 2,230 2,334 2,400 63
ZN 2,905 2,810 3,075 3,108 56
NI 17,930 17,725 19,250 19,810 64
SN 30,000 30,500 33,600 NA 83
Market Round-up (Data as on 9:30 am GMT)
Today 1 day 1 month 6 month Yr Ago
Gold 1,824 1,825 1,860 1,830 1,800
Silver 26.24 26.25 27.81 24.87 19.50
Platinum 1,136 1,127 1,142 1,086 829
Palladium 2,718 2,826 2,834 2,395 2,025
WTI 71.75 73.13 72.15 52.36 40.75
Brent 73.60 74.76 74.39 55.10 43.37
WTI Inv (mbbl) 438 438 459 487 537
Sterling 1.3847 1.3860 1.3988 1.3590 1.2553
Euro 1.1808 1.1837 1.1995 1.2082 1.1384
CNY 6.47 6.47 6.40 6.48 6.99
Dollar Index 92.63 92.41 91.13 90.77 96.35
Physical Premiums (Aluminium)
Today 1 day 1 month 6 month Yr Ago
US ($/lb) 0.300 0.300 0.273 0.149 0.095
JP ($/MT) 166.36 190.00 170.18 125.42 73.35
EU ($/MT) 304.38 304.38 245.50 151.50 106.88
Source: EDF Man Capital Markets/ BloombergYou can also read
