Metals looking quite mixed, copper looking vulnerable

Base metals closed mixed in the end on December 12, having started the day on a strong note across the board. Zinc and lead prices held on to gains, closing up an average of 1.6%, while copper and nickel prices closed down 1.2% and aluminium prices closed off 0.6%, while tin price were up 0.2%. Precious metal were largely firmer, with platinum prices closing up 2.1%, silver prices were up 1.2%, gold prices closed up 0.4% at $1,162.90 per oz, while palladium prices dropped 0.6%.

This morning the metals remain mixed, tin and nickel prices are up around 0.7%, aluminium price are up 0.2%, while three-month copper prices are down 0.2% at $5,751 per tonne and lead and zinc prices are down around 0.5%. Volume remains relatively light with 7,084 lots traded as of 06:55 GMT. Precious metals are little changed with spot gold prices off 0.1% at $1,161.72, palladium has rebounded 0.4% to $725.60 per oz.

In Shanghai, most of the base metals prices are weaker, the exception is tin that is up 3.4%, while the rest are down an average of 1%, with copper prices off 1.9% at Rmb 46,810 per tonne, aluminium and zinc are off 1.1%, nickel is off 0.6% and lead is off 0.3%. Spot copper in Changjiang is off 2.3% at Rmb 46,610-46810 per tonne, the spread with the February contract is level and the LME/Shanghai copper arb ratio is at 8.14.  

In other metals in China, SHFE steel rebar is up 1%, silver prices are up 0.7% and gold prices are up 0.1%. In international markets, spot Brent crude prices are up 0.5% at $55.70 per barrel.

Equities closed higher on December 12, the Euro Stoxx 50 closed up 0.1% and the Dow ended the day up 0.2%. Asia has been more mixed with the Nikkei up 0.5%, the Kospi is up 0.3%, while the rest are lower with the Hang Seng off 0.2%, the CSI 300 is off 0.1% and the ASX 200 is off 0.3%.

In FX, the dollar index’s latest rally stalled ahead of previous resistance, with the index recently quoted at 100.95. Yesterday’s high was 101.79 and the November 24 peak was at 102.05, so some consolidation seems to have emerged ahead of tomorrow’s, December 14, FOMC decision and statement.  The euro is up at 1.0640, the question is has it put in a double bottom? The yen at 115.22 is off yesterday’s low of 116.12, sterling is edging higher at 1.2672, as is the aussie at 0.7487. The dollar index and euro may just be pausing, although they could also be looking to reverse recent direction, which could mean the dollar’s run up has been a buy-the-rumour-sell-the-fact situation ahead of tomorrow’s likely US interest rate hike.

The yuan remains weak at 6.9279, while other emerging market currencies are looking firmer -no doubt on the back of a slightly weaker dollar.

The economic agenda is busy today, China’’ industrial production and retail sales beat expectations and fixed asset investment came in as expected. Later there is data out on German CPI, WPI, Italian industrial production, a host of UK price data, German and EU ZEW economic sentiment, EU employment change, with US data including the NFIB small business index and import prices – see table below for more details.  

The base metals continue to consolidate this morning, although copper prices are looking a bit more toppy following yesterday’s bearish outside day candlestick on the chart. Across the board with upside momentum stalled, there is a risk that stale long liquidation starts to emerge, but against that if the dollar starts to correct then that could give the metals a boost, as indeed could the better Chinese economic data – or is that now priced in? On balance, we like the markets fundamentals but feel prices have run ahead of the fundamentals so we would not be surprised to see more pullbacks.

Gold prices continue to trend lower, we wait to see if tomorrow’s FOMC announcements and likely rate rise signal a turning point given a rate rise has been so widely telegraphed. Silver and platinum prices have held up better than gold prices in recent days, while palladium prices are consolidating recent gains.  

 

Overnight Performance
GMT	06:54	+/-	+/- %	Lots
Cu	5751	-9	-0.2%	3846
Al	1736.5	3.5	0.2%	634
Ni	11420	85	0.7%	1085
Zn	2732	-13	-0.5%	1303
Pb	2340	-10	-0.4%	185
Sn	21165	165	0.8%	31
	Average		0.1%	7,084
Gold	1161.72	-1.18	-0.1%
Silver	17.069	0.019	0.1%
Platinum	928.4	-0.6	-0.1%
Palladium	725.6	2.6	0.4%
	Average PM		0.1%

 

SHFE Prices 06:55 GMT	RMB	Change	% Change
Cu	46810	-890	-1.9%
AL	13305	-145	-1.1%
Zn	22425	-245	-1.1%
Pb	20530	-70	-0.3%
Ni	95570	-560	-0.6%
Sn	148670	4530	3.1%
Average change (base metals)	0		-0.3%
Rebar	3470	34	1.0%
Au	268.45	0.2	0.1%
Ag	4268	28	0.7%

 

Economic Agenda
GMT	Country	Data	Actual	Expected	Previous
2:00am	China	Industrial Production y/y	6.2%	6.1%	6.1%
2:00am	China	Fixed Asset Investment ytd/y	8.3%	8.3%	8.3%
2:00am	China	Retail Sales y/y	10.8%	10.1%	10.0%
7:00am	Germany	German Final CPI m/m		0.1%	0.1%
7:00am	Germany	German WPI m/m		0.4%	0.4%
9:00am	Italy	Italian Industrial Production m/m		0.3%	-0.8%
9:30am	UK	CPI y/y		1.1%	0.9%
9:30am	UK	PPI Input m/m		-0.4%	4.6%
9:30am	UK	RPI y/y		2.1%	2.0%
9:30am	UK	Core CPI y/y		1.3%	1.2%
9:30am	UK	HPI y/y		7.3%	7.7%
9:30am	UK	PPI Output m/m		0.2%	0.6%
10:00am	Germany	German ZEW Economic Sentiment		14.0	13.8
10:00am	EU	Employment Change q/q		0.3%	0.4%
10:00am	EU	ZEW Economic Sentiment		16.5	15.8
11:00am	US	NFIB Small Business Index		96.7	94.9
1:30pm	US	Import Prices m/m		-0.3%	0.5%

 

 

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