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

 

 

 

The post Base metals prices remain choppy ahead of tomorrow’s option declaration appeared first on The Bullion Desk.

from The Bullion Desk http://ift.tt/2h0Fxt8
via IFTTT