Metals prices pull back in choppy trading

Base metals prices rebounded yesterday, December 1, with three-month prices closing up an average of 0.9%, led by a 3.3% rally in tin to $21,175 per tonne. Lead prices bucked the trend, they were off 0.1%, aluminium prices were up 0.1%, nickel prices were up 0.4%, while copper and zinc prices were up 1%, with copper prices at $5,795 per tonne. Precious metals sank further, closing down an average of 0.9% basis spot, with gold prices down 1.2% at $1,173.45 per oz.

This morning December 2, the base metals are off across the board with losses averaging 0.8%, led by zinc and lead prices that are 1.9% and 1.4% respectively, the rest are down between 0.2% for aluminium prices and 0.7% for copper prices at $5,756 per tonne. Precious metals are little changed, with gold prices at $1,173.35 per oz, silver and platinum prices are down 0.2% and palladium prices are up 0.3%.

In Shanghai, the base metals are down an average of 1.7%, also led by zinc and lead prices that are down 3.2% and 3.5% respectively, February copper prices are down 1.6% at Rmb 46,260 per tonne, nickel prices are down 1%, while aluminium and tin prices are down 0.5%. Spot copper prices in Changjiang are off 0.8% at Rmb 46,490-46,290 per tonne, the backwardation between spot and the February copper contract is equivalent to $33 per tonne, while the LME/Shanghai copper arb ratio is at 1:8.03.

In other metals in China, May iron ore prices are little changed at Rmb 574 per tonne, on SHFE May steel rebar is off 0.7% and June gold and silver prices are both off 0.2%.

Equities were mixed yesterday, December 1, with the Euro Stoxx 50 off 0.7% but the Dow closed up 0.4%. Asia this morning weaker as the market braces for the US employment report. The Nikkei is off 0.5%, the Hang Seng is off 1.2%, the CSI 300 is off 1.1%, the ASX 200 is down 1% and the Kospi is off 0.7%.

In FX, the dollar index is edging lower at 100.78, it is starting to look a bit toppy but the next direction is likely to come from the US employment data this afternoon. The euro at 1.0677 is climbing, as is sterling at 1.2635, while the yen (114.13) and aussie (0.7416) are consolidating. The yuan is off recent lows, recently quoted at 6.8870, while other emerging market currencies are looking quite mixed as they consolidate, the exception is the Brazil’s real has dropped further on domestic political concerns.  

Data out today includes Spanish unemployment change, UK construction PMI and EU PPI, while the focus will be on the US employment report. In addition, FOMC members Lael Brainard and Daniel Tarullo are speaking – see table below for more details.

We have been expecting choppy trading in base metals ahead of next week’s option declaration and that seems to be what we are getting. Weakness earlier on in the week was followed by rebounds mid-weak and then some weakness is emerging this morning. We expect more of the same, especially with this afternoon’s US employment report adding to the noise.

Gold prices remain under pressure and we expect that generally to be the case until the FOMC decision on December 14, although with the Italian referendum on constitutional reform being held on Sunday December 4, there could be a pick-up in demand for safe havens if there is negative fall-out from the result. Silver and platinum prices are following gold, while palladium prices are consolidating having rallied strongly recently.  

 

Overnight Performance
GMT	06:48	+/-	+/- %	Lots
Cu	5756	-39	-0.7%	3699
Al	1716	-4	-0.2%	1720
Ni	11170	-30	-0.3%	1045
Zn	2707.5	-53.5	-1.9%	3942
Pb	2318	-32	-1.4%	423
Sn	21055	-120	-0.6%	48
	Average		-0.8%	10,877
Gold	1173.35	-0.1	0.0%
Silver	16.522	-0.033	-0.2%
Platinum	910.8	-2.2	-0.2%
Palladium	752.4	2.4	0.3%
	Average PM		0.0%

 

SHFE Prices 06:48 GMT	RMB	Change	% Change
Cu	46260	-730	-1.6%
AL	13285	-65	-0.5%
Zn	22095	-735	-3.2%
Pb	20120	-775	-3.7%
Ni	91880	-930	-1.0%
Sn	143000	-690	-0.5%
Average change (base metals)	0		-1.7%
Rebar	3064	-23	-0.7%
Au	268.5	-0.55	-0.2%
Ag	4134	-7	-0.2%

 

Economic Agenda
GMT	Country	Data	Actual	Expected	Previous
8:00am	Spain	Spanish Unemployment Change		-25.8K	44.7K
9:30am	UK	Construction PMI		52.3	52.6
10:00am	EU	PPI m/m		0.4%	0.1%
1:30pm	US	Average Hourly Earnings m/m		0.2%	0.4%
1:30pm	US	Non-Farm Employment Change		175K	161K
1:30pm	US	Unemployment Rate		4.9%	4.9%
1:45pm	US	FOMC Member Brainard Speaks
6:00pm	US	FOMC Member Tarullo Speaks

     

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