METALS MORNING VIEW 18/03: Metals prices consolidate, waiting for fresh direction

Three-month base metals prices on the London Metal Exchange were for the most part little changed this morning, Monday March 18, the exception being copper, whose price was up by 0.7% at $6,474 per tonne, compared with $6,431.50 per tonne at Friday’s close.

Volume was average, with 6,328 lots traded on LME Select as at 7.23am London time, compared with 19,661 lots at a similar time on Friday.

Spot precious metals prices were up across the board by an average of 0.4% on Monday, with platinum up by 0.6%, silver prices up by 0.5%, palladium up by 0.3%, and gold prices up by 0.1% at $1,303.85 per oz, compared with $1,302.15 per oz at Friday’s close.

In China, base metals prices on the Shanghai Futures Exchange were for the most part weaker, the exception was May copper that was up by 0.8% at 49,350 yuan ($7,353) per tonne, compared with 48,960 per tonne at the close on Friday, while the May contracts for aluminium, zinc, tin and nickel and April lead, were off by an average of 0.9%.

The spot copper price in Changjiang was up by 0.9% at 49,890-50,280 yuan per tonne this morning from 49,430-49,820 yuan per tonne on Friday, while the London/Shanghai copper arbitrage ratio was weaker at 7.62 after 7.67 at a similar time on Friday.

In other metals in China, the May iron ore contract on the Dalian Commodity Exchange was up by 1.6% at 632.50 yuan per tonne from 622.50 yuan per tonne at the close on Friday. On the SHFE, the May steel rebar contract was up by 0.4% at 3,781 yuan per tonne compared with 3,765 yuan per tonne at Friday’s close.

In wider markets, the spot Brent crude oil price was 0.42% stronger at $67.30 per barrel from $67.02 per barrel at the close on Friday.

The yield on US 10-year treasuries was weaker this morning – it was recently quoted at 2.5943% from 2.6183% at a similar time on Friday. The yields on the US 2-year and 5-year treasuries remain inverted – they were recently quoted at 2.4407% and 2.4035% respectively. The German 10-year bund yield was firmer at 0.0900% after reaching 0.0750% on Friday morning.

Asian equity markets were stronger on Monday: Nikkei (+0.62%), Hang Seng (+1.30%), the CSI 300 (+2.85%), the Kospi (+0.16%),  as was the ASX 200 (+0.25%).

This follows a stronger performance in western markets on Friday: in the United States, the Dow Jones Industrial Average closed up by 0.54% at 25,848.87; and in Europe, the Euro Stoxx 50 was up by 1.32% at 3,386.08.

The dollar index is weaker, it was recently quoted at 96.44, compared with 96.61 at a similar time on Friday. The other major currencies we follow are for the most part firmer; the euro (1.1348), the Australian dollar (0.7118) and sterling (1.3277) are all higher, while the yen is consolidating (111.52).

The yuan is flat – it was recently quoted at 6.7122 compared with 6.7148 at a similar time on Friday. Most of the other emerging market currencies we follow are stronger, which suggests a degree of confidence in the markets.

Economic data out already on Monday shows Japan’s revised industrial production falling 3.4%,a slight improvement on the 3.7% decline announced previously. There is data out later on the EU trade balance, a German Bundesbank monthly report and the National Association of Home Builders index.

The metals are for the most part consolidating below recent highs with lead prices looking the weakest, while copper prices are holding up well considering the stock increases that were seen last Thursday and Friday. Overall, the metals seem to be waiting for fresh direction and while they wait they are drifting lower.

Gold, silver and platinum prices have become quite choppy as they consolidate, while palladium prices remain strong in line with their fundamentals and are perched just below the highs.