METALS MORNING VIEW 18/12: Metals consolidate, most with upside bias

Base metals prices on the London Metal Exchange are for the most part stronger this morning Monday December 18 - the exception being copper where prices are down 0.3% at $6,884 per tonne, while the rest are up an average of 0.4%.

This follows a strong performance on Friday when prices were up an average of 1.6%, led by a 3.4% gain in nickel prices.

Gold prices and the rest of the precious metals prices are firmer today, up by an average of 0.4%, with spot gold at $1,257.20 per oz. On Friday, gold prices were little changed, while platinum prices were up 1.1%, silver price were up by 0.7% and palladium prices fell by 0.6%.

On the Shanghai Futures Exchange today, the base metals are up across the board with gains averaging 2%, led by a 4.25% rise in nickel prices. Copper prices are up 1.5% at 53,560 yuan ($8,094) per tonne. Spot copper prices in Changjiang are up by 1.6% at 53,270-53,570 yuan per tonne and the LME vs Shanghai copper arbitrage ratio is at 7.78.

In other metals in China, iron ore prices are up strongly at 536 yuan per tonne, a rise of 7.1% on the Dalian Commodity Exchange. On the SHFE, steel rebar prices are up by 1.8%, while gold and silver prices are up by 0.2% and 0.5% respectively.

In international markets, spot Brent crude oil prices are up by 0.65% at $63.63 per barrel, the yield on US 10-year treasuries is little changed at 2.37%, while the German 10-year bund yield is at 0.31%.

Equities in Asia this morning are up across the board: The Nikkei (1.55%), the Hang Seng (0.7%), the CSI 300 (0.11%), the ASX 200 (0.70%) and the Kospi is little changed. This follows a stronger performance on in western markets on Friday where in the United States the Dow Jones closed up by 0.58% at 24,651.74 and in Europe where the Euro Stoxx 50 closed up by 1.07% at 3,598.79.

The dollar index, at 93.73, is consolidating above the 20 day moving average and still looks well placed to continue to rise. The euro at 1.1788 is also consolidating, as are sterling (1.3355) and the yen (112.66), while the Australian dollar is firmer at 0.7665.

The yuan at 6.6166 is slightly weaker and is giving back some of the gains seen following last week’s surprise interest rate rise.

The economic calendar is fairly quiet with EU CPI, A Bundesbank monthly report, UK CBI industrial order expectations and US NAHB housing market index.

Rebounds are generally under way again, which supports our view that the weakness seen in late November was long liquidation and profit-taking ahead of the year end and the concerns about a slower China were misplaced. While we are not bearish, neither are we overly bullish from these price levels. Instead we expect sideways trading across the metals complex with continued signs of concerted global growth providing support, while long liquidation ahead of year-end caps the upside.

Gold, silver and platinum prices continue to rebound and it does look as though the recent weakness was in anticipation of the Federal Open Market Committee rate rise last week and with that now out of the way, rebounds are under way and we expect them to continue as prices for gold, silver and platinum had become oversold.

Overnight Performance
GMT 08:43 +/- +/- % Lots
Cu 6,884 -17.5 -0.3% 3,809
Al 2,070 9.0 0.4% 1,093
Ni 11,635 60.0 0.5% 2,388
Zn 3,221 12.5 0.4% 1,461
Pb 2,534 12.0 0.5% 335
Sn 19,230 80.0 0.4% 74
  Average   0.3%        9,160
Gold   1,257.20 2.10 0.2%  
Silver        16.09 0.08 0.5%  
Platinum      897.40 6.40 0.7%  
Palladium   1,027.90 2.90 0.3%  
  Average PM   0.4%  

SHFE Prices 08.50 GMT RMB Change % Change
Cu      53,560           770 1.5%
AL       14,515           110 0.8%
Zn      25,615           350 1.4%
Pb      19,295           340 1.8%
Ni      93,740        3,760 4.2%
Sn    137,420        2,880 2.1%
Average change (base metals) 2.0%
Rebar   3,874.00        68.00 1.8%
Au      274.40          0.45 0.2%
Ag   3,800.00        19.00 0.5%
Iron Ore (DCE) May'18 536 35.5 7.1%

Economic Calendar
GMT Country Data Actual Expected Previous
9:00am Italy Italian Trade Balance 4.95B 3.23B 3.99B
 10:00am EU  Final CPI y/y 1.5% 1.5%
 10:00am EU Final Core CPI y/y 0.9% 0.9%
11:00am Germany German Buba Monthly Report  
11:00am UK CBI Industrial Order Expectations 14 17
3:00pm US  NAHB Housing Market Index   70 70

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