Metals looking brighter again

The base metals were generally firmer yesterday closing with average gains of 1.5 percent and led by a 4.5 percent run up in nickel to $10,160 on supply Philippine concerns, zinc rose 1.7 percent, tin and lead were up around 1.2 percent, aluminium was up 0.5 percent, while copper bucked the trend, it closed off 0.2 percent at $4,767.50. Copper had last week been one of the stronger performers, so a pause for breath was not so surprising. Precious metals were firmer yesterday with average gains of one percent, spread between a 2.1 percent rise for silver to $19.16 and a 0.2 percent rise in gold prices to $1,313.50.

This morning the base metals are mixed but little changed, copper, nickel and lead are off between 0.1 and 0.3 percent, while aluminium, zinc and tin are up between 0.1 and 0.3 percent. Volume this morning has been light with 3,019 lots traded as of 05:53 BST. Volume in zinc (990 lots) has outpaced that in copper (949 lots).

Gold prices continue to edge higher, they are up 0.2 percent at $1,315.88, platinum is up 0.3 percent at $1,022.20, silver is up 0.4 percent at $19.23 and palladium is up 0.8 percent at $684.10.

In Shanghai, the base metals are up across the board with gains averaging 1.3 percent, led by a 2.1 percent gain in zinc, nickel is up 1.8 percent, while at the other end tin is up 0.4 percent and copper is up 0.3 percent at Rmb 37,230. Spot copper is up 0.1 percent at Rmb 37,250-37,350, the spread with the November date is at an equivalent of $18 per tonne and the LME/Shanghai copper arb ratio is at 7.82, which suggests the arb window is closed.

In other metals in China, iron ore prices are rebounding again after their recent correction, prices are up 2.1 percent, steel rebar is up 1.5 percent, silver prices are up 0.7 percent and gold prices are up 0.2 percent. With gold prices lagging, it does look as though industrial metals are looking brighter. In international markets, Brent crude prices are off 0.3 percent at $45.77.

Equities – The Euro Stoxx 50 closed up 1.1 percent yesterday, but the Dow closed little changed. In Asia this morning markets are weaker – the Nikkei is off 0.3 percent, the Hang Seng is off 0.2 percent, the CSI 300 and ASX200 are off 0.1 percent, while the Kospi is bucking the trend with a 0.3 percent gain. The markets seem to be treading water ahead of tomorrow’s Bank of Japan and FOMC decisions and statements.

In FX, the dollar index is little changed at 95.86, as are most of the major currencies with the euro at 1.1173, sterling at 1.3040,the yen at 101.80 and the aussie at 0.7541. The yuan is 0.2 percent firmer at 6.6763, as is the rouble, while the other emerging market currencies we follow are up around 0.1 percent, with the ringgit up 0.3 percent.

The economic agenda is light, but important with German PPI and US housing starts and building permits, see table below for more details.

Copper prices are consolidating after the strong gains seen last Wednesday, while copper held on to its gains last week, most of the other metals did not do such a good job, but they are now seeing some further buying emerge that is giving the markets some buoyancy. They all look better placed to push ahead with their rebounds after their various corrections. The dollar is looking firmer but that does not seem to be acting as too much of a headwind, but the dollar and market sentiment may get a bit choppier over the next 36-hours as traders wait for and react to central bank policy changes.

Precious metals are generally weaker than they have been with gold prices hanging around support levels, as is platinum, but dips continue to be well supported, especially in the case of palladium.  Based on Fed Fund futures, the market suggests there is only a 12 percent chance of the FOMC raising rates tomorrow, as such the market is likely to take its next direction from the rhetoric of the FOMC statement. The large gross long fund position on Comex gold means there is risk of profit-taking, but so far what profit-taking has been seen seems to be well absorbed by bargain hunting. 

 

Overnight Performance
BST	05:53	+/-	+/- %	Lots
Cu	4759	-8.5	-0.2%	949
Al	1585.5	1.5	0.1%	535
Ni	10130	-30	-0.3%	476
Zn	2257.5	3	0.1%	990
Pb	1953.5	-2.5	-0.1%	65
Sn	19400	50	0.3%	4
	Average		0.0%	3,019
Gold	1315.88	2.73	0.2%
Silver	19.232	0.077	0.4%
Platinum	1022.2	3.2	0.3%
Palladium	684.1	5.1	0.8%
	Average PM		0.4%

 

SHFE Prices 05:53 BST	RMB	Change	% Change
Cu	37230	120	0.3%
AL	12095	180	1.5%
Zn	17900	370	2.1%
Pb	14450	230	1.6%
Ni	80330	1410	1.8%
Sn	124440	460	0.4%
Average change (base metals)	0		1.3%
Rebar	2269	34	1.5%
Au	284.7	0.5	0.2%
Ag	4300	31	0.7%

 

Economic Agenda
BST	Country	Data	Actual	Expected	Previous
7:00am	Germany	German PPI m/m		0.1%	0.2%
1:30pm	US	Building Permits		1.17M	1.14M
1:30pm	US	Housing Starts		1.19M	1.21M

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