METALS MORNING VIEW 09/02: Metals consolidate below resistance

The base metals are off to a fairly quiet start this morning, Thursday February 9, with three-month tin prices up 0.8% at $19,150 per tonne, copper is unchanged at $5,868 per tonne, while the rest are off an average of 0.5%.

Volume this morning is average with 5,822 lots traded as of 06:52 GMT. This morning’s trading therefore looks like consolidation after prices were up an average of 1.2% on Wednesday.

Precious metals this morning are for the most part little changed with gold, silver and platinum prices either side of unchanged with spot gold prices at $1,239.60 per oz, while palladium prices are up 0.7%. Like the base metals this morning, gold, silver and platinum prices are generally consolidating after average gains of 0.8% on Wednesday.

In Shanghai, the base metals are up an average of 0.8%, copper (47,360 yuan per tonne) and zinc prices are up 0.4%, nickel prices are up 0.5%, aluminium and lead prices are up 1.1% and tin is up 1.5%. Spot copper in Changjiang is off 0.1% at 47,180-47,300 yuan per tonne, the spread between spot and the futures is in a small contango, while the LME/Shanghai copper arb ratio is at 8.07.

In other metals in China, May iron ore prices are up 0.2% on the Dalian Commodity Exchange, on Shanghai Future Exchange steel rebar prices are up 1.2%, gold prices are up 0.7% and silver prices are up 0.2%. In international markets, spot Brent crude oil prices are up 0.6% at $55.50 per barrel.

Equities are consolidating, the Euro Stoxx 50 closed up 0.1% on Wednesday and the Dow was down 0.2%. This morning in Asia, the Nikkei is off 0.5%, the Hang Seng is up 0.3%, the ASX 200 is up 0.2% and the CSI 300 is up 0.4%.

In FX, the dollar index’s rebound has run into some resistance around 100.70, but at 100.42 it still seems to be looking to work higher, but this could just be a counter trend move within the downward trend that has unfolded so far this year. The euro is working lower at 1.0674, as is the Australian dollar at 0.7619, while the yen and sterling are flat at 112.29 and 1.2509, respectively. In emerging market (EM) currencies the yuan at 6.8660 is consolidating, of the other EM currencies we follow, the rupee is strengthening the most, the peso and rupiah are firmer, while the rest are flat.

On the economic agenda today, Japan’s machine tools orders climbed 3.5%, China’s passenger vehicle sales fell 9.8% in January compared with the same period a year earlier, according to the China Passenger Car Assn. This is not so surprising as a lot of buying had been rushed into 2016 as the market expected the tax break to end at the end of 2016. In effect this no doubt brought forward demand into 2016 that might otherwise have been seen in 2017. Germany’s trade balance data was lower than expected in December, but the surplus in 2016 was at a record high, which may well fuel the protectionist debate. Data out later includes US initial jobless claims, final wholesale inventories, natural gas storage and later Japanese PPI. In addition, US Federal Open Market Committee member Charles Evans and Bank of England Governor Mark Carney are speaking – see table below for more details.

For the most part the base metals still look well placed to push on with their advances, but prices are at levels where producer selling/profit-taking may be waiting overhead, which could end up either sending prices lower or slowing the advance down. For now the resistance prices are seeing suggests the latter. The two metals that are in a different set-up are nickel and tin that have both sold-off in recent weeks and months as they adjust to political changes with regards export rules in Indonesia and China. We wait to see if the price dips in these two metals attract bargain hunting or not. We expect prices to recover.

Gold prices continue to work higher, silver and platinum are following, while palladium is consolidating in high ground. We expect geopolitical uncertainty to remain a growing factor in the markets for most of 2017, so we remain quietly bullish for bullion prices.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

Overnight Performance

GMT 06:52 +/- +/- % Lots
Cu 5868 0 0.0% 2627
Al 1845 -3.5 -0.2% 864
Ni 10390 -85 -0.8% 985
Zn 2825 -11 -0.4% 1148
Pb 2376.5 -14 -0.6% 174
Sn 19150 150 0.8% 24
  Average
-0.2%         5,822
Gold 1239.6 -0.35 0.0%  
Silver 17.71 -0.02 -0.1%  
Platinum 1014.4 2.4 0.2%  
Palladium 772.5 5.5 0.7%  
  Average PM 0.2%  

SHFE Prices 06:52 GMT RMB Change % Change
Cu 47360 190 0.4%
AL  13805 155 1.1%
Zn 22995 95 0.4%
Pb 19295 215 1.1%
Ni 86890 450 0.5%
Sn 146010 2150 1.5%
Average change (base metals) 0   0.8%
Rebar 3237 39 1.2%
Iron ore 637.5 1.5 0.2%
Au 278.45 1.8 0.7%
Ag 4175 9 0.2%

Economic Agenda

GMT Country Data Actual Expected Previous
12:01am UK RICS House Price Balance 25% 23% 23%
6:00am Japan Prelim Machine Tool Orders y/y 3.5%
4.4%
7:00am Germany German Trade Balance 18.4B 23.2B 21.8B
1:30pm US  Unemployment Claims
249K 246K
3:00pm US  Final Wholesale Inventories m/m
1.0% 1.0%
3:30pm US  Natural Gas Storage
-155B -87B
6:10pm US  FOMC Member Evans Speaks

 
6:30pm UK  BOE Gov Carney Speaks

 
11:50pm Japan PPI y/y   0.0% -1.2%

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