METALS MORNING VIEW 28/02: Metals prices consolidate ahead of Trump's speech to US Congress

Base metals on the London Metal Exchange are split this morning, Tuesday February 28, with nickel giving back some of Monday’s gains, its three-month prices are off 0.8% at $10,950 per tonne, copper prices are down 0.4% at $5,917 per tonne and aluminium prices are off 0.1%, while tin is up 1% at $19,200, zinc is up 0.1% and lead is little changed.

Volume has been average at 5,073 lots as of 06:27 GMT. On Monday, metals opened on a weaker note, the exception being tin, but by the close most of the metals had climbed, while tin gave up its gains, and lost ground, and zinc remained weak.

Precious metals are for the most part firmer this morning with gains averaging 0.3%, led by a 0.6% run up in spot palladium prices to $785 per oz, while gold lags behind with a 0.1% gain to $1,254.13 per oz. On Monday, gold and silver prices closed down around 0.3%, while the PGMs were firmer with platinum prices up 0.2% and palladium the leader of the pack with a 1.4% price rise.

In Shanghai this morning, nickel and lead are the main movers, nickel prices are up 0.7%, while lead prices are down 1%, the rest are slightly weaker with copper at 47,850 yuan per tonne. Spot copper in Changjiang, is off 0.4% at 47,530-47,730 yuan per tonne, the LME/Shanghai copper arb ratio is at 8.05 and the forward copper curve on SHFE is in contango down the length of the curve.

In other metals in China, iron ore prices on the Dalian Commodity Exchange are off 0.7%, on the Shanghai Futures Exchange, steel rebar prices are up 0.1%, while gold and silver prices are off between 0.1% and 0.2%. In international markets, spot Brent crude oil prices are up 0.2% at $56.54 per barrel and the yield on 10-year treasuries is around 2.36%.

Equities edged higher on Monday with the Euro Stoxx 50 closing up 0.2% and the Dow closing up 0.1%. In Asia this morning, the Hang Seng is off 0.5%, the Kospi is up 0.3%, the ASX 200 is off 0.2%, while the Nikkei and CSI 300 are up around 0.1%. There seems a certain calm before US president Donald Trump’s speech to Congress later today, although judging by the fact the Dow has closed up for twelve consecutive days, something it has not done for 30 years, suggests a degree of complacency. We have not yet heard the phrase ‘the Trump put’, we wait to see if his speeches and policy continue to support investor sentiment.

In FX, the dollar index is treading water at 101.04, the euro is firmer at 1.0596, as is the yen at 112.36, while the sterling and the Australian dollar are flat at 1.2431 and 0.7680, respectively. The yuan is at 6.8675, while the rest of the emerging market currencies we follow remain on a slight back footing after recent strength - no doubt consolidating ahead of the Trump’s speech.

The economic agenda is busy today, Japan’s housing starts came in better than expected, there is a host of French data out including CPI, GDP and consumer spending, Italian CPI, while US data includes GDP, GDP prices, goods trade balance, wholesale inventories, house prices, Chicago PMI, consumer confidence Richmond manufacturing index and then later this evening Japan’s capital spending – see table below for more details.

The base metals are consolidating and we would expect that may remain the case until after the markets start to react to what Trump says later today and following on the heels of that, the markets are likely to get further direction from tomorrow's Chinese manufacturing PMI data.

Gold prices are also consolidating, they have performed strongly this year despite strength in equities and we expect that to generally remain the case. Prices are also holding up well even though the market is putting a 50% chance of a US rate rise at the March US Federal Open Market Committee meeting. This suggests the market has discounted the next one or two rate rises already and is more focused on the risk of geopolitical developments triggering a correction in other markets.

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

Overnight Performance
GMT 06:27 +/- +/- % Lots
Cu 5917 -22.5 -0.4% 2148
Al 1894.5 -2.5 -0.1% 855
Ni 10950 -85 -0.8% 798
Zn 2814 3 0.1% 894
Pb 2260.5 1 0.0% 323
Sn 19200 190 1.0% 55
  Average 0.0%        5,073
Gold 1254.13 0.88 0.1%  
Silver 18.319 0.049 0.3%  
Platinum 1030.9 3.9 0.4%  
Palladium 785 5 0.6%  
  Average PM   0.3%  


SHFE Prices 06:26 GMT RMB Change % Change
Cu 47850 -20 0.0%
AL  13780 -25 -0.2%
Zn 22870 -20 -0.1%
Pb 18555 -195 -1.0%
Ni 90820 600 0.7%
Sn 146500 -330 -0.2%
Average change (base metals) -0.2%
Rebar 3575 2 0.1%
Iron ore 705.5 -5 -0.7%
Au 281.25 -0.5 -0.2%
Ag 4309 -4 -0.1%


Economic Agenda
GMT Country Data Actual Expected Previous
 5:05am Japan Housing Starts y/y 12.8% 3.3% 3.9%
 7:45am France French Consumer Spending m/m 0.6% -0.8%
 7:45am France French Prelim CPI m/m 0.4% -0.2%
 7:45am France French Prelim GDP q/q 0.4% 0.2%
10:00am Italian Italian Prelim CPI m/m 0.1% 0.2%
1:30pm US  Prelim GDP q/q 2.1% 1.9%
1:30pm US  Goods Trade Balance -66.0B -64.4B
1:30pm US  Prelim GDP Price Index q/q 2.1% 2.1%
1:30pm US  Prelim Wholesale Inventories m/m 0.5% 1.0%
2:00pm US  S&P/CS Composite-20 HPI y/y 5.3% 5.3%
2:45pm US  Chicago PMI 53.2 50.3
3:00pm US  CB Consumer Confidence 111.3 111.8
3:00pm US  Richmond Manufacturing Index 10 12
11:50pm Japan Capital Spending q/y   0.6% -1.3%

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