Three-month nickel prices have led the decline with a 2.2% decline to $11,510 per tonne, while copper prices are down by 1.5% at $6,898 per tonne, which is a fresh low since prices peaked on October 16. Lead prices have also extended their lows with a 1.4% drop to $2,445.50 per tonne and zinc prices are also down by 1.4% at $3,175.50 per tonne.

Tin and aluminium prices fared slightly better with losses of 0.7% and 0.8%, respectively.

This morning’s weakness follows a mixed performance on Thursday that saw weaker closes on nickel, lead and copper, which were down between 0.2% and 0.7%, while aluminium prices were unchanged, zinc prices were up by 0.3% and tin prices up by 0.5%.

Precious metals prices are little changed this morning, with gold, silver and platinum prices remaining in their downward trends. Silver prices are 0.2% weaker at $16.73 per oz, gold prices are unchanged at $1,266.58 per oz and platinum and palladium prices are up by 0.1% at $915.50 per oz and 967.90 per oz, respectively.

Base metals prices on the Shanghai Futures Exchange are weaker across the board with losses averaging 1.6%; lead and nickel were off the most with losses of 2.9% and 2.7%, respectively. December copper prices are down by 1.6% at 54,000 yuan ($8,141) per tonne and aluminium, zinc and tin prices are down by around 0.9%.

Spot copper prices in Changjiang are down by 0.8% at 54,370-54,850 yuan per tonne and the London/Shanghai copper arbitrage ratio has fallen to 7.69, compared with 7.83 on Thursday, suggesting SHFE copper prices have fallen at a faster pace than copper prices on the LME. The disparity in the spot and futures copper percentage price change suggests copper futures have fallen since the physical price was set earlier this morning.

The steel-orientated metals in China are weaker again this morning with iron ore prices dropping by 5% to 431 yuan per tonne on the Dalian Commodity Exchange, while steel rebar prices on the SHFE are off by 2.1%. Gold and silver prices on the SHFE are also weaker by 0.5% and 1%, respectively.

In international markets, spot Brent crude oil prices are slightly weaker, down by 0.16% at $59.30 per barrel. The yield on US ten-year treasuries is higher at 2.46%, compared with 2.41% on Thursday morning and the German ten-year bund yield is weaker at 0.43%, compared with 0.48% on Thursday morning.

Equities in Asia are generally positive with gains in the Nikkei (1.24%), the CSI 300 (0.71%), the Kospi (0.64%) and the Hang Seng (0.63%), but the ASX 200 is weaker (-0.22%). The overall stronger tone follows the gains in Western markets on Thursday, where in the USA, the Dow closed up by 0.31% at 23,400.86 on some good earnings reports and as political progress was made on the Federal budget, while in Europe, the Euro Stoxx 50 closed up by 0.46% at 3,653.83, boosted by prospects of lower interest rates for longer.

The dollar also jumped higher on the political development, with the dollar index rising to 94.88, breaking above the former resistance on the chart at 94.27. We are still awaiting US President Donald Trump’s decision on who will be the next US Federal Reserve chair, so the dollar could still see some short-lived volatility. But for now, the breakout suggests the dollar is pushing on with its uptrend, which could prove to be a headwind for metals prices.

The stronger dollar is weighing on the currencies, with the euro falling to 1.1624, sterling is weaker at 1.3097, as is the yen at 114.27 and the Australian dollar has dropped sharply as the Australian government lost its majority in parliament.

The Chinese yuan at 0.6531 has also extended its weaker trend and the emerging currencies we follow are weaker too, especially the South African rand that was recently quoted at 14.3325, compared with 13.6340 a week ago.

Economic data already out today includes Japan’s National core CPI (0.7%) and Tokyo core CPI (0.6%). The former was in line with expectations and the latter beat the 0.5% level that was forecast. German import prices climbed 0.9%, which was above the 0.5% expected. US data out later includes the advanced reading of GDP, GDP prices and revisions to the University of Michigan data on consumer sentiment and inflation expectations.

This morning’s weakness on the LME suggests these high metals price levels are prompting more selling and the stronger dollar may well have encouraged that. There may also have been some book squaring as metal traders prepare for next week’s London Metals Week. Our view of late has been to remain quietly bullish, but expect trading to become choppier as prices are generally in high ground, so we should expect more bouts of scale-up selling along the way – this seems to be unfolding.

Gold prices are looking weaker with prices testing recent support levels; the low on October 6, was at $1,260.70 per oz. Silver and platinum prices are under pressure too, while palladium prices are managing to hold up relatively well. In the absence of any pick-up in geopolitical tensions, the stronger dollar and record-setting equity markets are likely to keep downward pressure on prices.


Overnight Performance
BST 07:36 +/- +/- % Lots
Cu 6898 -102 -1.5% 5359
Al 2173.5 -16.5 -0.8% 1248
Ni 11510 -255 -2.2% 2128
Zn 3175.5 -43.5 -1.4% 2515
Pb 2445.5 -35 -1.4% 1182
Sn 19795 -130 -0.7% 9
  Average -1.3%      12,441
Gold 1266.58 -0.02 0.0%  
Silver 16.73 -0.035 -0.2%  
Platinum 915.5 0.5 0.1%  
Palladium 967.9 0.9 0.1%  
  Average PM   0.0%  

SHFE Prices 07:36 BST RMB Change % Change
Cu 54000 -870 -1.6%
AL  16300 -145 -0.9%
Zn 25505 -215 -0.8%
Pb 18620 -555 -2.9%
Ni 93050 -2580 -2.7%
Sn 144080 -1260 -0.9%
Average change (base metals) -1.6%
Rebar 3589 -76 -2.1%
Au 274.05 -1.30 -0.5%
Ag 3842 -37 -1.0%
Iron Ore (DCE) Jan'18 431 -22.5 -5.0%

Economic Agenda
BST Country Data Actual Expected Previous
12:30am Japan National Core CPI y/y 0.7% 0.7% 0.7%
12:30am Japan Tokyo Core CPI y/y 0.6% 0.5% 0.5%
7:00am Germany German Import Prices m/m 0.9% 0.5% 0.0%
 1:30pm US  Advance GDP q/q 2.6% 3.1%
 1:30pm US  Advance GDP Price Index q/q 1.7% 1.0%
3:00pm US  Revised UoM Consumer Sentiment 100.8 101.1
3:00pm US  Revised UoM Inflation Expectations     2.3%