Base metals remain under pressure

The base metals remain on a back footing this morning with three-month prices off an average of 0.2 percent as of 06:34 BST, as prices continue to correct having been turned back by overhead resistance in recent week. Nickel prices that have generally held up well in recent days, are off 0.9 percent, recently trading at $10,345 per tonne, aluminium prices are down 0.5 percent, copper, zinc and lead prices are off between 0.1 and 0.3 percent, while tin prices buck the trend with a 0.3 percent gain. Volumes have been average with 5,535 lots traded, with aluminium trading the most with 2,437 lots traded.

Precious metals are mixed, spot platinum prices are down 0.5 percent this morning, gold prices are down 0.1 percent at $1,261.15 per ounce, silver prices are little changed and palladium prices are up 0.3 percent at $639 per ounce – see table below for more details.

In Shanghai, the base metals are mixed this morning, zinc are tin prices are up 0.5 and 0.4 percent respectively, aluminium prices are down 0.5 percent, lead prices are off 0.3 percent, while nickel and copper prices are off 0.1 percent with December copper at Rmb 37,240 per tonne. Spot copper prices in Changjiang are down 0.5 percent at Rmb 37,380-37,460 per tonne, while the spread between spot and the December contract is at a backwardation equivalent to $32 per tonne. The LME/SHFE copper arbitrage window is open with the ratio at 7.97 – this should help underpin copper prices, it may also prompt some unwinding of short-SHFE /long-LME positions.

In other metals in China, iron ore prices are little changed this morning with the January contract on the Dalian Commodity Exchange at Rmb 435 per tonne, the January steel rebar prices on SHFE is up 2.1 percent, while gold and silver prices for the December contracts are up 0.4 percent. In international markets, spot Brent crude oil prices were recently traded at $52.10 per barrel.

Equities were upbeat yesterday with the Euro Stoxx and Dow closing up 1.3 and 0.4 percent respectively and Asia this morning is mixed with the Nikkei up 0.3 percent, the ASX 200 is up 0.5 percent, the Kospi is up 0.1 percent, the CSI 300 is little changed and the Hang Seng is off 0.2 percent.

In FX, the dollar index is consolidating recent gains, recently at 97.86, the high on Monday was 98.17, the euro is holding above the July lows, recently trading at 1.0983, sterling is getting some lift of recent lows, with prices recently at 1.2275, the yen is flat at 103.72, while the aussie remains firm at 0.7677. In emerging market currencies, the yuan has halted its seven-day slide that took it to a low of 6.7410, it was recently quoted at 6.7362, most of the other emerging market currencies we follow are firmer, which suggests a degree of calm/risk-on in the market and mixed to stable Chinese economic data out this morning may be supporting that.

Today sees a host of economic data, China’s GDP for the third quarter remained unchanged at 6.7 percent, industrial production dipped to 6.1 percent from a previous reading of 6.3 percent,. Fixed asset investment edged up 8.2 percent from 8.1 percent and retail sales came in at 10.7 percent having previously climbed 10.6 percent. Japan’s all industries activity climbed 0.2 percent. Later there is data out on the UK employment situation, with US data including building permits, housing starts, crude oil inventories and the Beige Book. UK’s Monetary Policy Committee member Andrew Haldane is also speaking – see table below for more details.

The base metals are looking mixed this morning with zinc and tin trying to work higher while the rest remain under pressure. Given Chinese economic data shows a degree of stabilisation we would not be surprised to see some buying return, we have seen the recent pullbacks as consolidation. Copper continues to yo-yo between its well defined upper and lower ranges, with prices recently trading at $4,677, they are approaching the long term support line at $4,637, so we wait to see if the line continues to provide support. Overall, we expect this year’s upward trends in the base metals to continue so would be looking for bargain hunting and short-covering to provide lift before too long.

The precious metals remain in consolidation mode, gold prices are trying to get some lift, but we wait to see if there is follow through buying. The lower prices are attracting investment buying, ETF holdings are at highs for the year and we would expect the lower prices of late to prompt some physical restocking.  That said, on the charts the precious metals continue to look vulnerable.

 

Overnight Performance
BST	06:34	+/-	+/- %	Lots
Cu	4673	-2.5	-0.1%	1403
Al	1635	-7.5	-0.5%	2437
Ni	10345	-95	-0.9%	883
Zn	2283	-6.5	-0.3%	568
Pb	1975.5	-1.5	-0.1%	232
Sn	19775	65	0.3%	12
	Average		-0.2%	5,535
Gold	1261.15	-1.15	-0.1%
Silver	17.597	-0.003	0.0%
Platinum	937.2	-4.8	-0.5%
Palladium	639	2	0.3%
	Average PM		-0.1%

 

SHFE Prices 06:34 BST	RMB	Change	% Change
Cu	37240	-50	-0.1%
AL	12635	-65	-0.5%
Zn	18155	95	0.5%
Pb	15405	-45	-0.3%
Ni	81340	-110	-0.1%
Sn	128890	560	0.4%
Average change (base metals)	0		0.0%
Rebar	2471	50	2.1%
Au	275.3	1	0.4%
Ag	4024	15	0.4%

 

Economic Agenda
BST	Country	Data	Actual	Expected	Previous
3:00am	China	GDP q/y	6.7%	6.7%	6.7%
3:00am	China	Industrial Production y/y	6.1%	6.4%	6.3%
3:00am	China	Fixed Asset Investment ytd/y	8.2%	8.2%	8.1%
3:00am	China	NBS Press Conference
3:00am	China	Retail Sales y/y	10.7%	10.6%	10.6%
5:30am	Japan	All Industries Activity m/m	0.2%	0.2%	0.2%
9:30am	UK	Average Earnings Index 3m/y		2.3%	2.3%
9:30am	UK	Claimant Count Change		3.2K	2.4K
9:30am	UK	Unemployment Rate		4.9%	4.9%
1:30pm	US	Building Permits		1.17M	1.15M
1:30pm	US	Housing Starts		1.18M	1.14M
3:30pm	US	Crude Oil Inventories		2.1M	4.9M
6:00pm	UK	MPC Member Haldane Speaks
7:00pm	US	Beige Book

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