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Industry Info

LME MORNING – Base metals prices soft on dollar strength, Aluminium at 1-month low

Base metals prices were sideways to lower in Tuesday's premarket, with activity mostly of a technical nature, traders said.

"Markets are flat today - we are seeing some CTA activity in lead and zinc but copper is comfortably stuck in its current range and there is nothing fresh to pull it out," a trader said. "The cloud of the US deficit is still hanging over the market after it was postponed."

A stronger dollar continues to cap prices - the euro was last at 1.3495, down a fifth of a cent.

"The base metals prices have struggled in the face of the rebounding dollar… if the dollar pulls back, the metals might run into underlying support and overall rangebound trading will continue," FastMarkets analyst William Adams said.

Investors are sticking to the sidelines ahead of important data, with market participants seemingly reluctant to build new positions ahead of key Chinese economic numbers and this week's ECB meeting, Credit Suisse said.

Today, the EU September PPI rose 0.1 percent against a forecast 0.3 percent; the US will release its ISM non-manufacturing PMI later.

This week's key data event is Friday's US jobs report. The consensus forecast for the change in US non-farm payrolls is for 126,000 jobs to have been created last month, with the unemployment rate tipped to tick 0.1 percentage points higher to 7.3 percent.

In the metals, copper gained $19 on Monday's close to $7,168 per tonne; around 8,000 lots have changed hands on Select so far.

"Copper prices have been actively traded this morning as investors might take different strategies while waiting for those figures and conference announcements," Richard Fu at Newedge said.

In the forward spreads, early-month borrowing has ended, with cash/three months now comfortably back in a contango. Inventories and cancelled warrants were both lower this morning, falling to 469,975 tonnes and 280,425 tonnes respectively.

Aluminium prices dropped to a one-month low of $1,816. They were last at $1,818, down $4 on the close.

"The danger that markets drift back after failing to break resistance is always there but aluminium is now down some 5 percent since the recent highs and it looks like very much a case of 'back to the drawing board' for the bulls," Triland said.

Nickel prices at $14,354 was down $16. Stocks and cancelled warrants both hit fresh all-time high - total inventories rose a net 1,374 tonnes to 239,958 tonnes, while cancelled warrants jumped 10,470 tonnes, centred in Rotterdam and Johor.

Lead at $2,151 was down $8, with no movements in stocks, but zinc rose $2 to $1,926. Stocks fell 3,425 tonnes to 1,023,225 tonnes and cancelled warrants dropped 800 tonnes to 533,775 tonnes.

Tin was last $80 higher at $22,790 after stocks and cancelled warrants both fell 125 tonnes to 12,120 tonnes and 3,735 tonnes respectively.

Steel was indicated at $230/250 while cobalt and molybdenum were neglected. There was no change in stocks across all three.

Source: Fast Markets