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Aluminum Breaks Three-Year High

Base Metals

Copper: LME copper slipped 0.1% to $10,615 earlier in the morning as potential physical buyers faded higher prices after a rally in recent weeks. Meanwhile, US futures were up over 0.6%, with December contracts nearing the $5.00 level. Weak demand from China has also weighed on prices as Chinese buyers appear to be on the sidelines ahead of US-China trade talks this week. High prices have also dented demand from Chinese markets as the Yangshan copper premium, which reflects demand for China’s imports, has fallen 38% over the past month. Supportive of the metal was LME data, which showed that available copper stocks in the LME-registered warehouses fell to 127,350 tons, the lowest since July, after 2,000 of fresh cancellations in South Korea. Mining disruptions also offer support for copper, although recent disruptions have been largely priced in.

On the data front, industrial output in China grew 6.5% on an annualized basis in September, beating expectations of 5.0% growth despite GDP growing at its slowest pace in a year during the third-quarter. Markets are also closely watching this week’s meeting between top Chinese Communist Party officials, where they will review a proposed five-year plan for the country.

Zinc: Zinc added 0.7% to $3008. Zinc prices rose to the $3,000 mark on Tuesday, close to the high of $3,050 tested earlier in October as persistent bottlenecks among smelting operations pressured the supply of refined zinc. The International Lead and Zinc Study Group reported that refined zinc production has fallen more than 2% this year despite the 6.3% jump in mined output. The premium of the cash LME zinc contract over the three-month forward rose to a record high of $323 a ton earlier this week as tight near-term supply grips the LME system. LME zinc stocks are at their lowest since early 2023 despite the global market remaining on track to hit a surplus this year.

Aluminum: Aluminum rose 1.1% to $2,812 a ton, hitting its highest level in over three years following a partial shutdown of a smelter in Iceland and tight supply. On Monday, data showed that global primary aluminum output in September edged up 0.9% year-over-year to 6.08 million tons amid a government cap on output in the world’s largest producer China.

Tin: Tin gained 0.7% to $35,630.

Lead: Lead rose 0.4% to $1,993.

Nickel: Nickel fell 0.3% at $15,135.

Precious Metals

Gold: Gold prices fell for the second straight day on Wednesday, following the metal’s biggest daily drop in over five years as a wave of profit-taking overtook markets and as the dollar strengthened. Gold prices fell 5.3% on Tuesday, after notching a record high of $4,381.21 in the previous session. The gains on Monday were driven by expectations of further Fed rate cuts and strong safe-haven demand amid ongoing uncertainty from the government shutdown. Investors continue to closely watch trade talks between the US and China this week following last week’s flare in tensions. Spot gold still remains above its 21-day MA of $4,005.

The economic calendar this week will center around PMI data on services and manufacturing activity out Friday alongside September’s CPI inflation data. Markets are nearly priced in for a rate cut from the Fed next week and for another 25 bps cut in December. Regarding Friday’s PMI data, markets will look to clues on the labor market, given the absence of official US data and remarks from Fed officials that the Fed’s focus is more on employment, than inflation. Continued strong central bank purchasing of gold is likely to provide a floor for gold prices, while retail demand from gold-backed ETFs will also lend support.

Silver: Silver futures are up 0.5% following a strong wave of profit-taking on Tuesday that sent prices down more than 7%. Yesterday’s large selloff signaled that markets could have considered silver to be overbought after breaking record highs last week.

Platinum: Platinum futures are up 0.9% to $1,534.

 

 

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Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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