Metals mixed as prices consolidate

Base metals closed mixed on Friday, October 14 with copper, aluminium and tin prices ending lower between 0.6 and 1.3 percent, while nickel, lead and zinc prices closed up between 0.4 and 0.6 percent. Three-month copper prices closed at $4,675.50 per tonne. Spot precious metals were also mixed on Friday, palladium prices rallied two percent to $649 per ounce, platinum prices were up 0.2 percent at $931 per ounce, while gold and silver prices were down 0.6 and 0.4 percent respectively, with gold prices at $1,250.25 per ounce.

This morning, the base metals remain mixed with copper and tin prices up 0.5 and 0.3 percent respectively, with three-month copper prices at $4,697 per tonne, the rest are off marginally with losses of between 0.1 and 0.2 percent. Volume on the LME has been below average with 3,957 lots traded.

Precious metals are more upbeat this morning with prices up across the board by an average of 0.4 percent. Buying seems to be returning to precious metals camp with strong inflow in the precious metals ETFs.

In Shanghai, December aluminium is off 1.4 percent, the rest are firmer with gains varying between 0.1 percent for copper at Rmb 37,320 per tonne, to lead that is up 1.3 percent – see table below. Spot copper in Changjiang is down 0.5 percent at Rmb 37,360-37,460 per tonne, the backwardation between spot and the December contracts is around an equivalent of $20 per tonne, while with the LME / Shanghai copper arb ratio at 7.95, the arb window should be open for some traders, which in turn to help support LMe copper prices.

In other metals in China, January iron ore futures are up 2.3 percent on the Dalian Commodity Exchange, while on SHFE January steel rebar is also up 2.3 percent, while gold and silver prices are off 0.1 to 0.2 percent. In international markets, crude oil was recently quoted around $51.90 per barrel.

Equities closed firmer on Friday with the Euro Stoxx 50 up 1.7 percent and the Dow closed up 0.2 percent. This morning Asia is mixed, with the Nikkei up 0.2 percent, the Hang Seng is off 0.6 percent, the CSI 300 is little changed, the ASX 200 is off 0.8 percent and the Kospi is down 0.9 percent.

In FX, the dollar index is strong at 98.07, the highest it has been since March, conversely the euro and sterling are weaker, recent trading at 1.0983 and 1.2155 respectively, while the yen and aussie are on a back footing at 104.17 and 0.7603. In emerging market currencies, the yuan is falling, recently trading at 6.7329, the ringgit is following suit, while the rest of the emerging market currencies we follow are neutral-to-weaker.

On the economic calendar Japan’s industrial production climbed 1.3 percent, later there is data on Italy’s trade balance, EU CPI, UK leading indicators and US data includes Empire State Manufacturing index, industrial production and capacity utilisation. In addition, central bank speakers include UK’s Monetary Policy Committee Ben Broadbent, FOMC member Stanley Fischer, ECB President Mario Draghi and German Bundesbank President Jens Wieidmann – see table below for more details.

The base metals have generally been consolidating at lower prices recently but so far the pullbacks look orderly and fairly limited. The two metals holding up better than the rest are aluminium and nickel. For the most part we remain mildly bullish and expect dips to attract bargain hunting unless broader markets become jittery. With that in mind we would keep a close eye on the Chinese yuan as its weakness may start to alarm markets.

Gold prices remain vulnerable as they trade in a tight range after their recent fall below $1,300 per ounce. Another down leg cannot be ruled out, that said the market has had to absorb a lot of fund selling so there appears to be good underlying buying around, albeit not from the funds trading Comex. Silver prices are also consolidating in a narrow range, while the PGMs continue to trend lower, although palladium seems to have run into dip buying now. Generally we feel the PGMs have become oversold now. 

 

Overnight Performance
BST	06:16	+/-	+/- %	Lots
Cu	4697	21.5	0.5%	1512
Al	1669	-4	-0.2%	896
Ni	10465	-15	-0.1%	473
Zn	2259	-2.5	-0.1%	991
Pb	2007	-2	-0.1%	82
Sn	19495	60	0.3%	3
	Average		0.0%	3,957
Gold	1255.09	4.84	0.4%
Silver	17.435	0.035	0.2%
Platinum	938	7	0.8%
Palladium	650.8	1.8	0.3%
	Average PM		0.4%

 

SHFE Prices 06:16 BST	RMB	Change	% Change
Cu	37320	20	0.1%
AL	12675	-185	-1.4%
Zn	17915	180	1.0%
Pb	15460	195	1.3%
Ni	82210	660	0.8%
Sn	127800	290	0.2%
Average change (base metals)	0		0.3%
Rebar	2433	55	2.3%
Au	273.35	-0.55	-0.2%
Ag	3982	-2	-0.1%

 

Economic Agenda
BST	Country	Data	Actual	Expected	Previous
12:01am	UK	Rightmove HPI m/m	0.9%		0.7%
5:30am	Japan	Revised Industrial Production m/m	1.3%	1.5%	1.5%
9:00am	Italy	Trade Balance		4.25B	7.80B
10:00am	EU	Final CPI y/y		0.4%	0.2%
10:00am	EU	Final Core CPI y/y		0.8%	0.8%
1:30pm	US	Empire State Manufacturing Index		1.0	-2.0
2:15pm	US	Capacity Utilization Rate		75.6%	75.5%
2:15pm	US	Industrial Production m/m		0.2%	-0.4%
2:30pm	UK	CB Leading Index m/m			0.0%
3:45pm	UK	MPC Member Broadbent Speaks
5:15pm	US	FOMC Member Fischer Speaks
6:35pm	EU	ECB President Draghi Speaks
6:35pm	EU	German Buba President Weidmann Speaks

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