Metals prices already rebounding, helped by PMI data and oil

• Oil production cuts and generally firmer PMI data support sentiment

Base metals consolidated on November 30, with prices closing up an average of 0.5%, led by a 2.8% rise in three-month tin prices to $21,065 per tonne, zinc and lead prices closed lower by 1.2% and 0.3% respectively, while the rest were firmer with copper prices closing up 1% at $5,795 per tonne. Precious metals saw spot gold, silver and platinum prices drop 1.3%, 0.9 and 1% respectively, while palladium continued to climb, with a 0.8% gain to $766 per oz.

This morning, December 1, the base metals are up across the board with three-month prices up an average of 1%, ranged between 0.4% for copper ($5,817/[per tonne) and tin prices and 1.9% gains for lead and zinc prices. Nickel and aluminium prices are up 0.7% and 0.6%, respectively.

Precious metals are firmer this morning with spot prices up an average of 0.6%, gold prices are up 0.3% at $1,176.22 per oz, silver, platinum and palladium are up 0.5%, 0.6% and 0.8%, respectively.

In Shanghai, the base metals are up an average of 1.4%, tin prices are up 2.7%, copper prices are up 2.3% at Rmb 47,280 per tonne, lead prices are unchanged, while the rest are up between 0.2% for zinc prices and 1.8% for aluminium prices. Spot copper prices in Changjiang are up 0.5% to Rmb 46,670-46,870 per tonne – again with copper futures up that much more than the spot price it suggests the rally gathered momentum after spot prices were been settled. The LME/Shanghai copper arbitrage window should be reopen with the ratio at 1:8.13.

In other metals in China, iron ore prices are rebounding with the May contract up 4.9%, on SHFE steel rebar prices are also up 4.9%, while gold and silver prices are down 1% and 0.7%, respectively. In international markets spot Brent crude prices are up 1.8% at $52.40 per tonne.

The Euro Stoxx 50 closed up 0.4% and the Dow closed little changed on November 30, and Asia this morning is more upbeat with the Nikkei up 1.1%, the Hang Seng is up 0.4%, the CSI 300 is up 0.5%, the Kospi is little changed and the ASX200 is up 1.1%.

In FX, the dollar index rebounded yesterday on the back of good ADP non-farm employment change, it reached a high of 101.84, but it is slipping this morning and is recently quoted at 101.24. The euro is consolidating at 1.0624, sterling is edging higher at 1.2529, the yen weakened yesterday to 114.82, but was recently quoted at 113.95 and the aussie is consolidating at 0.7412. The yuan is holding in low ground at 6.9000 and the other emerging market currencies are getting some light lift off recent lows – firmer oil prices may well be helping to stabilise the currencies.

Today is another busy day for economic data – official PMI data in China beat expectations, the Caixin PMI dropped to 50.9, from 51.2 and PMI data edged higher in Japan, see table below for more details. Later there is PMI data out across Europe and the US, unemployment data in Italy, UK and US, plus other US data on construction spending, natural gas storage and total vehicle sales.

The recent pullback in base metals prices that started on Monday, November 28, have been fairly sharp but also short-lived it would seem with prices generally running into dip buying yesterday, November 30, and follow through buying this morning. At face value this suggests underlying sentiment is still bullish. As we have said in recent days, we expect higher than normal volatility until after option declaration on December 7, but the OPEC deal, combined with better data of late, does suggest a brighter outlook for commodities, although prices do already look overbought, but they can remain in that mode for an extended period, especially if supported by stronger economic data.

The precious metals, with the exception of palladium, have been looking vulnerable as the stayed around in low ground and spot gold and platinum prices did sell-off this morning, but once again the dips have attracted buying. Given all the political uncertainty that lies ahead, we expect gold to pick-up further safe-haven demand, but the market is for now no doubt focused on a likely December 14, US interest rate rise. It may need to get that out of the way before finding a base.

 

Overnight Performance
GMT	06:26	+/-	+/- %	Lots
Cu	5817	22	0.4%	3737
Al	1742	11	0.6%	1524
Ni	11250	80	0.7%	1475
Zn	2754	52	1.9%	2728
Pb	2390	45	1.9%	333
Sn	21155	90	0.4%	33
	Average		1.0%	9,830
Gold	1176.22	3.97	0.3%
Silver	16.566	0.076	0.5%
Platinum	914.1	6.1	0.7%
Palladium	771.8	5.8	0.8%
	Average PM		0.6%

 

SHFE Prices 06:28 GMT	RMB	Change	% Change
Cu	47280	1060	2.3%
AL	13615	240	1.8%
Zn	23055	40	0.2%
Pb	21270	0	0.0%
Ni	93520	1080	1.2%
Sn	144940	3770	2.7%
Average change (base metals)	0		1.4%
Rebar	3189	149	4.9%
Au	268.6	-2.7	-1.0%
Ag	4130	-30	-0.7%

 

Economic Agenda
GMT	Country	Data	Actual	Expected	Previous
12:30am	Japan	Final Manufacturing PMI	51.3	51.1	51.1
1:00am	China	Manufacturing PMI	51.7	51	51.2
1:00am	China	Non-Manufacturing PMI	54.7		54
1:45am	China	Caixin Manufacturing PMI	50.9	51.0	51.2
6:59am	UK	Nationwide HPI m/m	0.1%	0.2%	0.0%
8:15am	Spain	Manufacturing PMI		53.7	53.3
8:45am	italy	Manufacturing PMI		51.4	50.9
8:50am	France	Final Manufacturing PMI		51.5	51.5
8:55am	Germany	Final Manufacturing PMI		54.4	54.4
9:00am	EU	Final Manufacturing PMI		53.7	53.7
9:00am	Italy	Monthly Unemployment Rate		11.6%	11.7%
9:30am	UK	Manufacturing PMI		54.5	54.3
10:00am	EU	Unemployment Rate		10.0%	10.0%
12:30pm	US	Challenger Job Cuts y/y			-39.1%
1:30pm	US	Unemployment Claims		253K	251K
2:45pm	US	Final Manufacturing PMI		53.9	53.9
3:00pm	US	ISM Manufacturing PMI		52.3	51.9
3:00pm	US	Construction Spending m/m		0.6%	-0.4%
3:00pm	US	ISM Manufacturing Prices		52	54.5
3:30pm	US	Natural Gas Storage		-52B	-2B
All Day	US	Total Vehicle Sales		17.9M	18.3M

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