Metals prices start the week slightly firmer

Base metals remained mixed and generally weak last week but some buying started to emerge on Friday, October 14. Precious metals were also mixed last week with gold and silver prices consolidating with a slightly firmer tone, while the PGMs continued lower.

This morning, base metals three-month prices are up an average of 0.5 percent as of 07:00 BST, led by a 1.3 percent gain in nickel prices to $10,100 per tonne. Copper, aluminium and zinc prices are up around 0.6 percent, tin and lead are slightly weaker. Volume on the LME is average with 5,119 lots traded.

In precious metals this morning, the PGMs are up around 1.2 percent, the spot silver price is up 0.3 percent at $17.57 per oz and gold prices are off 0.1 percent at $1,264.95 per oz.

In Shanghai, the December base metals prices are up an average of 0.5 percent led by a 1.8 percent gain in aluminium prices, zinc prices are off 0.4 percent while the rest are up between 0.1 percent for tin and 0.7 percent for copper that was recently trading at Rmb 37,380 per tonne. Spot copper prices in Changjiang are up 0.7 percent at Rmb 37,480-37,680, the spread between spot and the December contract has widened to a backwardation equivalent to $44 per tonne and the LME/Shanghai arb window is opening up more with the ratio at 1:8, which should provide some support to copper prices outside China.

In other metals in China, January iron ore prices are up three percent on the Dalian Commodity Exchange, January steel rebar prices are up 0.2 percent while gold and silver prices are little changed. In international markets, spot Brent crude prices were recent quoted around $51.55  per barrel, which is down around 0.7 percent.

Equities were quiet going into the weekend with the Euro Stock closing up 0.3 percent on Friday while the Dow closed off 0.1 percent but Asia this morning is for the most part looking upbeat with more M&A activity around. The Nikkei is up 0.3 percent, the Hang Seng is up 0.4 percent, the CSI 300 is up 1.2 percent, the Kospi is up 0.5 percent, but the ASX 200 is off 0.4 percent.

In FX, the dollar index continues to climb it has reached a high of 98.85 this morning, the highest since February 03, conversely the euro is weaker at 1.0880, the yen is at 103.83, the aussie is firm at 0.7626 and sterling is consolidating around 1.2210. In emerging market currencies, the yuan continues to weaken, it was recently quoted at 6.7708, other Asian currencies are on a back footing, while other non-Asian emerging market currencies are less affected.

On the data front, Japan’s flash manufacturing data beat expectation, coming in at 51.7 having been expected to be 50.6, later there is flash manufacturing and services PMI data out in France, Germany, the EU and the US. In addition, there is data on UK industrial order expectations, Chinese leading indicators and FOMC members William Dudley and James Bullard are speaking – see table below for more details.

The base metals prices remain under pressure with support levels being tested in recent days, some metals have found support and are getting some lift, notably aluminium, while others have stopped sliding but remain vulnerable. The stronger dollar is no doubt adding downward pressure, but for generally we see the weakness of late as profit-taking and we expect bargain hunting to provide support, after which prices are expected to work higher.

Gold and silver spot prices worked higher last week but ended the week in consolidation mode, the fact they did this while the dollar was strengthening suggests bargain hunting had started to emerge, which looks encouraging. Having corrected, they are well placed to work higher again. With the PGM prices being under a lot of downward pressure ahead of a likely wage deal in South Africa, the metals have started to look oversold – we would now not be surprised if some bargain hunting appeared.

 

Overnight Performance
BST	06:59	+/-	+/- %	Lots
Cu	4670	26	0.6%	1343
Al	1637	10.5	0.6%	1503
Ni	10100	125	1.3%	1368
Zn	2269	12	0.5%	739
Pb	2000	-3	-0.1%	163
Sn	19965	-5	0.0%	3
	Average		0.5%	5,119
Gold	1264.95	-1.45	-0.1%
Silver	17.568	0.048	0.3%
Platinum	939	12	1.3%
Palladium	628.3	7.3	1.2%
	Average PM		0.7%

 

SHFE Prices 07:02 BST	RMB	Change	% Change
Cu	37380	250	0.7%
AL	12835	230	1.8%
Zn	18130	-75	-0.4%
Pb	15740	85	0.5%
Ni	80280	310	0.4%
Sn	131970	96	0.1%
Average change (base metals)	0		0.5%
Rebar	2469	4	0.2%
Au	276.6	0.2	0.1%
Ag	4004	-5	-0.1%

 

Economic Agenda
BST	Country	Data	Actual	Expected	Previous
12:50am	Japan	Trade Balance	0.35T	0.21T	0.36T
1:30am	Japan	Flash Manufacturing PMI	51.7	50.6	50.4
7:30am	UK	MPC Member Shafik Speaks
8:00am	France	French Flash Manufacturing PMI		0.1	49.7
8:00am	France	French Flash Services PMI		53	53.3
8:30am	Germany	German Flash Manufacturing PMI		54.3	54.3
8:30am	Germany	German Flash Services PMI		51.5	50.9
9:00am	EU	Flash Manufacturing PMI		52.6	52.6
9:00am	EU	Flash Services PMI		52.4	52.2
11:00am	Germany	German Buba Monthly Report
11:00am	UK	CBI Industrial Order Expectations		-4	-5
2:00pm	China	CB Leading Index m/m			0.90%
2:00pm	US	FOMC Member Dudley Speaks
2:05pm	US	FOMC Member Bullard Speaks
2:45pm	US	Flash Manufacturing PMI		51.6	51.5

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