понедельник, 5 декабря 2016 г.

Base metals prices remain choppy ahead of tomorrow’s option declaration

The base metals prices for the most part put in a strong start to the week on Monday December 5, with the complex closing up by an average of 2.1%, basis three-month prices. Zinc, lead and copper prices led the charge with gains of 4.1%, 3.3% and 2.4%, with copper prices at $5,927.50 per tonne. The high in copper this year has been $6,045.50 per tonne. Precious metals saw spot gold prices fall 0.6% to $1,169.75 per oz yesterday, platinum prices were up 0.4%, while silver and palladium were up 0.1%.

This morning December 6, the base metals are off across the board with losses averaging 0.6% as of 06:26 GMT, lead is down 1.4%, nickel is down 0.1%, the rest are off between 0.4% for copper ($5,904 per tonne) and 0.6% for zinc and tin prices. Volume of 9,358 lots is below the average we have been seeing since late October.

Precious metals are little changed this morning, with spot gold prices at $1,170.25 per oz.

In Shanghai, the base metals continue to trade their own fundamentals, there is less of a herd move, with copper (Rmb 47,640 per tonne) and zinc prices up 1.6%, lead prices are up 0.8%, nickel prices are up 0.3%, tin prices are little changed, while aluminium is down 0.9%. Spot copper in Changjiang is up 1.7% at Rmb 47,720-47,920 per tonne. The spot to February contract spread on copper is at an equivalent of $40 per tonne backwardation and the LME/Shanghai copper arb ratio is at 1:8.07.

In other metals in China, May iron ore futures are up 4.2% on the Dalian Commodity Exchange, on SHFE steel rebar prices are up 2.1%, gold prices are down 0.3% and silver prices are up 0.3%. In interantional markets spot Brent crude oil prices are up 0.8% at $54.57 per barrel.

Equities were strong yesterday with the Euro Stoxx 50 closing up 1.3% and the Dow closed up 0.2% setting another intraday record high in the process. Asia for the most part is upbeat this morning, the Nikkei is up 0.5%, the Hang Seng is up 0.7%, the ASX 200 is up 0.5%, the Kospi is up 1.4%, while the CSI 300 is off 0.1%.

In FX, the dollar index weakened yesterday, retreating to a low of 99.85, it was recently quoted at 100.27, the euro has put in a strong rebound to 1.0744, sterling is firmer at 1.2748, while the aussie and yen are consolidating at 114.04 and 0.7447. The yuan is weaker again at 6.8782 and the other emerging market currencies we follow are all looking firmer, helped by the weaker tone in the dollar.

Data out today includes German factory orders that beat expectations with a 4.9% gain, compared with 0.6% expected, later there is EU retail PMI, revised GDP, there is a Ecofin meeting and US data includes revised non-farm productivity and labor productivity, trade balance, factory orders and economic optimism – see table below for more details.

The base metals seem to be in two boats, copper, nickel and tin prices are trying to push higher, while aluminium, lead and zinc seem more focused on consolidation. We continue to expect volatility ahead of tomorrow’s option declaration. It will be interesting to see if once that has passed whether there is more of a pullback as prices consolidate and markets adjust more to the recent strength. We generally remain bullish for the fundamentals, but feel most prices have run ahead of their fundamentals.

The precious metals remain on a back footing and we expect that may remain the case until next week’s FOMC decision on December 14. Palladium prices remain the exception, they have pulled back from high ground, but are still holding up well considering the weakness in the other precious metals.

 

 

Overnight Performance
GMT 06:26 +/- +/- % Lots
Cu                         5,904 -24 -0.4% 3735
Al 1718 -8 -0.5% 1404
Ni 11610 -15 -0.1% 1030
Zn 2754 -16 -0.6% 2582
Pb 2308 -32 -1.4% 601
Sn 21150 -125 -0.6% 6
  Average   -0.6% 9358
Gold 1170.25 0.5 0.0%  
Silver 16.752 0.027 0.2%  
Platinum 933 -1 -0.1%  
Palladium 742.6 0.6 0.1%  
  Average PM   0.0%  

 

SHFE Prices 06:26 GMT RMB Change % Change
Cu 47640 730 1.6%
AL  13155 -120 -0.9%
Zn 22840 360 1.6%
Pb 20310 170 0.8%
Ni 95130 300 0.3%
Sn 144200 -180 -0.1%
Average change (base metals) 0   0.5%
Rebar 3212 65 2.1%
Au 268.3 -0.8 -0.3%
Ag 4178 11 0.3%

 

Economic Agenda
GMT Country Data Actual Expected Previous
12:00am Japan
Average Cash Earnings y/y
0.1% 0.2% 0.0%
12:01am UK
BRC Retail Sales Monitor y/y
0.6% 1.7% 1.7%
 7:00am Germany
German Factory Orders m/m
 

4.9%

0.6% -0.6%
9:10am EUR
Retail PMI
    48.6
9:30am UK
FPC Meeting Minutes
     
10:00am EU 
Revised GDP q/q
  0.3% 0.3%
All Day EU
ECOFIN Meetings
     
1:30pm US 
Revised Nonfarm Productivity q/q
  3.2% 3.1%
1:30pm US 
Trade Balance
  -39.4B -36.4B
1:30pm US 
Revised Unit Labor Costs q/q
  0.4% 0.3%
3:00pm US 
Factory Orders m/m
  1.9% 0.3%
3:00pm US 
IBD/TIPP Economic Optimism
  52.3 51.4

 

 

 

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