Monday was an unspectacular day for base metals generally with lead posting the greatest gain after China announced changes in its export tax structure. The commodities complex rose throughout, led by stronger oil (on Nigerian unrest) and palladium (auto demand/Russian supply), while equities markets also improved. After last week’s fund-led sell-off, aluminium picked up from 2842 as trading restarted to a high of 2870 at close of play; volumes were light.
The nearby contango eased again marginally after narrowing last week, though notable was the emergence of a $1.00-backwardation in Jun20-22, with June options exposure remaining in the forefront of traders’ minds. Forwards steadied by $0.50/mth in places, though in this morning’s premarket nearbys and forwards were all better bid as outrights lifted . The LME’s WC warrant banding report was garbled again on its website, though it appeared as though one party still remained in the 30-40% band.
Lead continued to fly on Tuesday morning, while aluminium climbed further from 2861 to a high so far of 2894, on turnover of 2,400 lots. Although values remained within the well-established trading range, locals noted buying interest from delta hedgers against June’s mega options positions, with dealers having to buy more cover as the market rises. Technical resistance was clear in the 2910/30 area and the market would need to surmount 2970 to break out of the range, Cliff Green Consultancy contended.
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