METALS MORNING VIEW 31/10: Nickel, zinc prices rebound; others consolidate

Base metals prices on the London Metal Exchange are up across the board in the morning on Tuesday October 31, with the complex up by an average of 0.9%.

Three-month nickel prices lead the way with a 2.3% increase to $11,920 per tonne, followed by a 1.2% increase in zinc prices to $3,247.50 per tonne, while the rest are up between 0.4% and 0.8%, with copper prices up 0.4% at $6,888 per tonne.

Volume has been above average with 10,160 lots traded as of 7:57am London time.

This follows a mixed performance on Monday when aluminium, lead and tin prices closed down an average of 1.1%, while copper, nickel and zinc prices closed up an average of 0.6%.

This morning, spot gold and silver prices are little changed, with gold prices at $1,276.71 per oz, while the platinum group metals are firmer with platinum prices up by 0.4% and palladium prices up by 0.8%. This follows a firmer day on Monday for gold, silver and platinum prices that closed up between 0.2% and 0.3%, while palladium prices closed off 0.3%.

Base metals prices on the Shanghai Futures Exchange are for the most part firmer this morning; the exceptions are aluminium and tin prices that are down 0.1% and 0.2% respectively. The rest are up by an average of 1.5%, led by a 2.8% gain in nickel, with zinc prices up 1.8% and copper prices up 0.6% at 53,820 yuan ($8,118) per tonne. Spot copper prices in Changjiang are little changed, off 10 yuan per tonne at 53,650-53,800 yuan per tonne and the London/Shanghai copper arbitrage ratio is unchanged at 7.82.

The steel-orientated metals in China are mixed this morning, iron ore prices are unchanged at 425 yuan per tonne on the Dalian Commodity Exchange, while steel rebar prices on the SHFE are up 1%. Gold and silver prices on the SHFE are firmer with gains of 0.1% and 0.3% respectively.

In international markets, spot Brent crude oil prices are weaker by 0.22% at 60.39 per barrel. The yield on US 10-year treasuries is weaker at 2.36%, compared with 2.40% on Monday morning and the German ten-year bund yield is similarly weaker at 0.36%, down from 0.39% on Monday morning.

Equities in Asia are generally negative with the Nikkei little changed, the CSI 300 off by 0.1%, the Hang Seng down by 0.3%, the ASX 200 down 0.2%, but the Kospi is up 0.9% at record highs. This follows weakness on Monday in the US, where the Dow closed up by 0.36% at 23,348.74, while in Europe was little changed with the Euro Stoxx 50 closing down by 0.02% at 3,662.79.

The dollar index, at 94.52, is consolidating its gains from the end of last week, which was when the dollar broke higher. Conversely, the euro’s recent weakness has paused at 1.1643, sterling is firmer at 1.3205, as is the yen at 113.11 and the Australian dollar consolidating at 0.7674. 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 dollar’s breakout suggests the dollar is pushing on with its uptrend, which could prove to be a headwind for metals prices.

The Chinese yuan is firmer at 6.6249, as are most of the other emerging currencies we follow, although the Real is on a back footing at 3.2875.

Economic data already out today includes China’s manufacturing PMI, which dropped to 51.6 from 52.4, while non-manufacturing PMI dropped to 54.3 from 55.4. Japan’s data included Bank of Japan core CPI which climbed 0.5%, in line with expectations and the previous reading, Japan’s housing starts dropped 2.9%, French flash GDP climbed 0.5%, with French consumer spending rising 0.9%, after a 0.3% fall and French CPI rose 0.1% after a previous reading of -0.2%. Data out later includes Italian CPI, EU unemployment, and US data including employment costs, composite HPI, Chicago PMI and consumer confidence.

Zinc and nickel prices are leading on the upside this morning, while the rest are consolidating recent weakness. Weaker than expected Chinese PMI data is a disappointment and are likely to support views that the metals may have run ahead of themselves again. 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 playing out.

The precious metals prices are consolidating; gold prices have got some lift-off support and underlying tails on the candlestick charts suggest scale down buying. 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
GMT 07:57 +/- +/- % Lots
Cu 6888 25.5 0.4% 3837
Al 2170 8 0.4% 1260
Ni 11920 270 2.3% 2349
Zn 3247.5 37.5 1.2% 2166
Pb 2434.5 20.5 0.8% 499
Sn 19525 95 0.5% 49
  Average 0.9%       10,160
Gold 1276.71 -0.29 0.0%  
Silver 16.845 -0.01 -0.1%  
Platinum 922.1 4.1 0.4%  
Palladium 973.5 7.5 0.8%  
  Average PM   0.3%  


SHFE Prices 08:05 GMT RMB Change % Change
Cu 53820 310 0.6%
AL  16265 -10 -0.1%
Zn 25970 460 1.8%
Pb 18610 155 0.8%
Ni 95210 2590 2.8%
Sn 143680 -350 -0.2%
Average change (base metals) 1.0%
Rebar 3628 37 1.0%
Au 274.5 0.20 0.1%
Ag 3848 11 0.3%
Iron Ore (DCE) Jan'18 428 0 0.0%


Economic Agenda
GMT Country Data Actual Expected Previous
1:00am CNY Manufacturing PMI 51.6 52.2 52.4
1:00am CNY Non-Manufacturing PMI 54.3 55.4
3:05am JPY BOJ Outlook Report  
3:05am JPY BOJ Policy Rate -0.1% -0.1% -0.1%
3:05am JPY Monetary Policy Statement  
5:00am JPY BOJ Core CPI y/y 0.5% 0.5% 0.6%
5:00am JPY Housing Starts y/y -2.9% -3.0% -2.0%
6:30am EUR French Flash GDP q/q 0.5% 0.5% 0.6%
6:30am JPY BOJ Press Conference  
7:45am EUR French Consumer Spending m/m 0.9% 0.6% -0.3%
7:45am EUR French Prelim CPI m/m 0.1% 0.1% -0.2%
 9:00am EUR Italian Monthly Unemployment Rate 11.1% 11.2%
10:00am EUR CPI Flash Estimate y/y 1.5% 1.5%
10:00am EUR Core CPI Flash Estimate y/y 1.1% 1.1%
10:00am EUR Prelim Flash GDP q/q 0.5% 0.6%
10:00am EUR Italian Prelim CPI m/m 0.1% -0.3%
10:00am EUR Unemployment Rate 9.0% 9.1%
12:30pm USD Employment Cost Index q/q 0.7% 0.5%
1:00pm USD S&P/CS Composite-20 HPI y/y 5.8% 5.8%
1:45pm USD Chicago PMI 60.2 65.2
2:00pm USD CB Consumer Confidence   121.1 119

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