Market Insights > Metals

Base Metals Dashboard - Week Ending June 21, 2024

June 21, 2024

Aluminum

Aluminum trades sideways amid optimism over potential stimulus measures aimed at bolstering China's economy, as discussed by Chinese officials and analysts. The People's Bank of China is exploring ways to enhance liquidity through government bond trading, potentially boosting infrastructure investment and industrial metal demand amidst a sluggish economic backdrop. (Source: Bloomberg)

Chinese hydropower is surging, supporting aluminum production. Chinese aluminum production has reached an all time high last month as smelters brought back production. Heavy rains have boosted hydropower output in some regions, increasing electricity supply. (Source: Bloomberg)

Copper

China's declining real estate sector has sharply reduced demand for copper, pushing prices down to around $9,690.50 per ton on the London Metal Exchange. With property completions plunging over 20% monthly this year, compared to strong growth in 2023, the construction industry, a key consumer of copper, faces significant challenges. Despite optimism in sectors like electric vehicles and data centers, copper prices have fallen from record highs above $11,000 per ton last month due to rising inventories and economic uncertainties in China. (Source: Bloomberg)

Other Important LME and CME Metals & Markets

Iron ore prices are facing a challenging fourth consecutive week of losses, dropping below $105 per ton in Singapore futures trading. Concerns over China's struggling property market, a key driver of steel demand, are weighing heavily on prices despite robust global mine supplies. Exports from Australia's Port Hedland hit a record high of nearly 52 million tons in May, further contributing to the market surplus. Iron ore futures have fallen by 25% this year, reflecting a surplus in the global seaborne market exacerbated by high port inventories in China, which recently reached a two-year peak. As of now, iron ore is trading at $104.90 per ton, with analysts highlighting continued strong supply pressures amid delayed effects of Chinese policy stimulus on demand.
Gold prices dropped by up to 1.4% as stronger-than-expected US manufacturing and services data prompted a reassessment of the Federal Reserve's rate cut timeline. The data, showing accelerated activity levels, led Treasury yields to rebound, reducing the attractiveness of non-interest-bearing gold. Bart Melek, global head of commodity strategy at TD Securities, suggested that robust PMI readings might influence the Fed towards a more hawkish stance, signaling fewer rate cuts than previously anticipated. Despite reaching record highs recently, gold remains up 13% for the year, buoyed by geopolitical tensions and steady central bank and Chinese consumer demand. As of June 21, spot gold is trading at $2,327.89 per ounce, with silver declining and platinum gaining, while palladium surged due to short-covering activities. If you have exposure to the gold market and are concerned about increasing prices, please reach out to AEGIS for strategies.

LME Aluminum

LME Aluminum 3M settled at $2,464.95/mt, down $3.22/mt on the week.

Aluminum prices were modestly down this week. Compared to last week, the futures forward curve remains in a steep contango, meaning nearby prices are lower than forward prices. Aluminum consumers concerned about increasing prices might consider hedging future needs by buying swaps or call options. Depending on risk tolerance, end-users might consider strategies that use only swaps or options or a combination of both. The aluminum market has sufficient liquidity to use swaps and options. Please get in touch with AEGIS for specific strategies that fit your operations.

Midwest Premium

Prompt month CME MWP last traded/settled at 19.965¢/lb this week.

The CME Midwest Premium market is now in a contango from the June ‘24 contract on forward. The CME Midwest Premium swap market is thinly traded, with no options market. Hedging in this thinly traded market is challenging, so we recommend using limit orders. Please get in touch with AEGIS for specific strategies that fit your operations.

* Please note all these charts are for desktop only. *

LME Copper

LME Copper 3M settled at $9,682.5/mt, down $59/mt on the week.

Compared to last Friday, LME Copper's forward curve has shifted vertically lower by approximately $105.98/mt and is in contango throughout 2024 and early 2025. The copper market has sufficient liquidity to use swaps and options. Depending on their risk tolerance, consumers might consider strategies that use only swaps, options, or a combination of both. Please get in touch with AEGIS for specific strategies that fit your operations.

LME Nickel

LME Nickel 3M settled at $17,054/mt, down $351/mt on the week.

As prices were down this week, nickel’s forward curve also shifted lower. It remains in a steep contango, meaning that nearby prices are lower than futures prices. The nickel market has sufficient liquidity to use swaps and options. Depending upon your risk tolerance, consumers might consider strategies that use only swaps or options or a combination of both. Please get in touch with AEGIS for specific strategies that fit your operations.