Metals prices rebound, stronger oil prices helping

The base metals corrections seem to have run their courses with prices up an average of 1.8% this morning, with strong gains seen across the board. Copper prices lead the rally with a 2.3% rise to $5,562.50 per tonne, basis three-months. Lead and nickel prices are up 2.1%, while aluminium prices are up the least with a 1.1% gain. Precious metals are up across the board with average gains of 0.7%, with palladium prices firmly in the lead, as has been the case in recent days, it is up one percent at $729.20 per oz, while gold prices are up 0.4% at $1,213.70 per oz.

In Shanghai, the January base metals are up an average of 2.1%, aluminium prices lead the gains with a 3.7% gain, followed by zinc and lead prices. Copper prices are up 1.9% to Rmb 45,030 per tonne and nickel prices are up the least with a 0.6% gain. Spot copper in Changjiang is up 1.4% at Rmb 44,420-44,620 per tonne, the run up in the futures has pushed the spread back into a contango equivalent to $60 per tonne, while the LME/Shanghai copper arb ratio is strong at 1:8.1.

In other metals in China, January iron ore prices closed down 1.6%, steel rebar closed off 0.9% and gold and silver prices were up 0.1%. In international markets Brent crude oil prices are up 1.2% at $47.34 per barrel.

Equities – were negative on Friday with the Euro Stoxx 50 down 0.7 percent and the Dow closed down 0.2 percent, but Asia is generally firmer with the Nikkei up 0.8%, the Hang Seng is up 0.1%, the CSI 300 is up 0.7%, although the Kospi is off 0.5% and the ASX200 is off 0.2%.

In FX, the dollar index remains strong at 101.10, the high on Friday, November 18, was 101.49. The euro is trying to consolidated at 1.0622, sterling is weak at 1.2354, the yen at 110.97 continues to fall as does the aussie at 0.7341. The yuan remains weak at 6.8957 and the other emerging market currencies we follow remain weak, but appear to be attempting to consolidate.  

The economic agenda is light today, Japan’s all industries activity climbed 0.2%, which was better than expected but unchanged from the prior month. Later data is out on China’s leading indicators and ECB President Draghi is speaking – see table below for more details.

The base metals underwent a correction for most of last week with prices consolidating towards the end of the week, but this morning commodities are looking stronger on the back of better prospects for an OPEC deal, it would seem. As we saw the recent pullbacks in metals prices as consolidation then the metals look well placed to see their rallies restart, or at least hold up at these higher levels. That said, if the return of bullishness is all based on the prospects of an oil deal then we should be braced for more volatility as in the past, high hopes on OPEC reaching deals have tended to disappoint.

Precious metals are polarised with palladium pushing to the upside and looking particularly strong, while gold, silver and platinum prices have all been weak. The strong dollar has been weighing on the latter group, but a stronger oil prices may well give precious metals some support if stronger oil prices encourages investors back into commodity baskets.

 

Overnight Performance
GMT	06:59	+/-	+/- %	Lots
Cu	5562	126.5	2.3%	5038
Al	1713	18	1.1%	2918
Ni	11155	230	2.1%	2397
Zn	2592.5	33.5	1.3%	3232
Pb	2181	45.5	2.1%	641
Sn	20530	330	1.6%	48
	Average		1.8%	–
Gold	1213.7	5.25	0.4%
Silver	16.705	0.15	0.9%
Platinum	925	5	0.5%
Palladium	729.2	7.2	1.0%
	Average PM		0.7%

 

SHFE Prices 06:59 GMT	RMB	Change	% Change
Cu	45030	850	1.9%
AL	14045	500	3.7%
Zn	21240	555	2.7%
Pb	18230	440	2.5%
Ni	91420	520	0.6%
Sn	144060	1940	1.4%
Average change (base metals)	0		2.1%
Rebar	2758	-25	-0.9%
Au	275.1	0.15	0.1%
Ag	4122	4	0.1%

 

Economic Agenda
GMT	Country	Data	Actual	Expected	Previous
4:30am	Japan	All Industries Activity m/m	0.2%	0.0%	0.2%
2:00pm	China	CB Leading Index m/m			1.1%
4:00pm	EU	ECB President Draghi Speaks

 

 

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