Metals mixed, half find support,half still vulnerable

Base metals recovered from early weakness yesterday, October 19 – by the close three-month prices were up an average of 0.4 percent, although performances were mixed. Lead and tin prices closed with gains of around 1.4 percent, zinc prices closed up 1.1 percent, while the rest were weaker, led by a 1.2 percent drop in nickel prices to $10,325 per tonne, aluminium prices closed off 0.6 percent at $1,032.50 per tonne and copper prices were little changed at $4,670.50 per tonne. Precious metals ended yesterday mixed with spot PGM prices down an average of 0.3 percent, while spot gold and silver prices closed up 0.6 and 0.5 percent respectively with gold prices at $1,270.40 per ounce.

This morning, the base metals are little changed with three-month prices ranged between up 0.2 percent for copper at $4,682 per tonne and down 0.2 percent for zinc at $2,311.50 per tonne, volume remains light at 3,345 lots traded as of 06:20 BST – see table below for more details.

Gold and silver are little changed this morning with gold prices at $1,271.20 per ounce, but the PGMs have reversed yesterday’s weakness and are both up 0.6 percent.

In Shanghai, the base metals are mixed, December aluminium and nickel prices are off 0.5 percent, the rest are up with lead and zinc prices around 0.7 percent higher and tin and copper prices are up 0.2 percent, with copper recently trading at Rmb 37,360 per tonne. Spot copper prices Changjiang are up 0.1 percent at Rmb 37,410-37,530 per tonne, the spread between spot and the December copper contracts is at an equivalent of $25 per tonne backwardation, while the LME/Shanghai copper arbitrage ratio is at 7.98, which suggests the arb window is ajar, which should start to support LME prices.

In other metals in China, January iron ore prices are up 0.7 percent on the Dalian Commodity Exchange, with spot dollar prices around $58 per tonne. January steel rebar prices on SHFE are up 0.4 percent and December gold and silver prices are up around 0.8 percent. In international markets, spot Brent crude oil prices were recently trading at $52.50 per barrel.

Equities were slightly firmer yesterday with the Euro Stoxx 50 and Dow closing up 0.3 and 0.2 percent respectively and Asia this morning is generally firmer too with the Nikkei up 1.2 percent, the Hang Seng is up 0.5 percent, the CSI 300 is up 0.2 percent, the ASX 200 is up 0.1 percent, although the Kospi is down 0.1 percent.

In FX, the dollar index’s rally having paused at the start of the week, has found some strength again this morning and is recently quoted at 98.02, the high early Monday was 98.17. Conversely the euro and yen are slightly weaker at 1.0961 and103.70, while sterling and the aussie are treading water at 1.2272 and 0.7670, respectively. The yuan remains weak at 6.7370, but other emerging market currencies do not seem to be following suit and are if anything showing some strength within recent ranges.

The economic agenda is fairly busy, German PPI showed weakness, later there is data out on the EU current account, UK retail sales, there is an EU economic summit, the ECB rate decision and press conference. US data includes initial jobless claims, the Philly Fed manufacturing index, existing home sales and natural gas storage. As well as ECB President Mario Draghi speaking at the ECB press conference, UK’s Monetary Policy Committee member Nemat Shafik is speaking – see table below for more details.

In recent days/weeks the base metals have pulled back from resistance levels, some have already found support and are rebounding, namely zinc, lead and tin, while nickel and copper’s retreats are now consolidating, leaving aluminium prices still under pressure. Nickel, copper and aluminium prices remain vulnerable, but the underlying up trends/support lines look strong so we would expect scale down buying to provide support and for bargain hunting to then appear.

Gold prices appear to have found a base either side of the $1,250 per ounce, basis spot, with prices now getting some lift and silver prices are well placed to challenge recent resistance $17.78 per ounce. Platinum prices seem to be consolidating after a long drawn out retreat and prices look oversold, while palladium’s price slide has halted for now, but prices are not yet getting any lift and as such remain vulnerable. A rebound in gold prices may well see help support the other precious metals.    

 

Overnight Performance
BST 06:20 +/- +/- % Lots
Cu 4682 11.5 0.2% 1206
Al 1633 0.5 0.0% 683
Ni 10325 10 0.1% 164
Zn 2311.5 -4 -0.2% 1211
Pb 2005.5 -2 -0.1% 73
Sn 20000 10 0.1% 8
  Average   0.0%         3,345
Gold 1271.2 0.8 0.1%  
Silver 17.697 0.002 0.0%  
Platinum 945.7 5.7 0.6%  
Palladium 637.7 3.7 0.6%  
  Average PM   0.3%  

 

SHFE Prices 06:18 BST RMB Change % Change
Cu 37360 90 0.2%
AL  12615 -65 -0.5%
Zn 18310 130 0.7%
Pb 15540 125 0.8%
Ni 81100 -440 -0.5%
Sn 129300 300 0.2%
Average change (base metals) 0   0.2%
Rebar 2481 9 0.4%
Au 277.6 2.55 0.9%
Ag 4054 27 0.7%

 

Economic Agenda
BST Country Data Actual Expected Previous
12:45am US 
FOMC Member Dudley Speaks
     
7:00am Germany
 PPI m/m
-0.2% 0.2% -0.1%
 9:00am EU 
Current Account
  24.3B 21.0B
9:30am UK
Retail Sales m/m
  0.4% -0.2%
Tentative Spain
10-y Bond Auction
    1.07|1.8
Day 1 EU 
EU Economic Summit
     
12:45pm EU
Minimum Bid Rate
  0.0% 0.0%
1:00pm UK
MPC Member Shafik Speaks
     
1:30pm EU
ECB Press Conference
     
1:30pm US
Initial jobless claims
  251K 246K
1:30pm US
Philly Fed Manufacturing Index
  5.3 12.8
3:00pm US
CB Leading Index m/m
  0.2% -0.2%
3:00pm US
Existing Home Sales
  5.36M 5.33M
3:30pm US
Natural Gas Storage
  72B 79B