The three-month aluminium price on the London Metal Exchange was higher during morning trading on Monday September 9, with a 0.6% gain against continued outflows in LME stocks, while spread tightness in nickel futures has been a key factor in reduced buying.
The light metal’s three-month price began the day trading at around $1,777.50 per tonne, before a 1.3% climb led the metal to breach nearby resistance at $1,800 per tonne and, at a dollar above that, reach its highest level since August 19.
Volumes traded in aluminium topped the complex over the morning, with some 4,400 lots exchanged as at 9.30am London time.
Yet despite total LME aluminium stocks being close to their lowest level since 2007 at 920,000 tonnes this morning, price action in aluminium has failed to react to a steady drawdown in inventories over the summer period.
Meanwhile, three-month nickel futures have spent most of the morning trading lower. But despite the metal’s price falling to an intra-morning low of $17,400 per tonne, nickel futures have recovered nearly 3%, recently trading close to $17,800 per tonne.
Yet despite waves of buying, near-term business in nickel is now increasingly costly, with the metal’s benchmark cash/three-month spread recently trading in a $53-per-tonne backwardation, narrowing from a $17.50-per-tonne backwardation on Friday.
“Traders are showing little inclination to buy much metal at the moment, save what they have to, and investors are getting more nervous as the geopolitical situation gets ever harder to read,” Kingdom Futures director and chief executive Malcolm Freeman said in a morning report.
“The one point to note is that the falls are far faster and more explosive than the rallies in their nature,” he added.
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