Metals prices consolidate in choppy trading

Base metals prices are consolidating after a yesterday’s early weakness attracted buying. This morning, December 23, prices are off an average of 0.4%, nickel prices are down 1%, tin prices are down 0.7% and zinc prices are down 0.5%, while the rest are little changed with three-month copper prices up 0.1% at $5,534 per tonne. Volume has been average with 5,953 lots traded as of 07:10 GMT. Precious metals are little changed this morning with prices ranged between silver prices being off 0.1% and the rest being up 0.2% with spot gold prices at $1,130.90 per oz.

Yesterday, December 22, three-month base metals prices spiked lower but dip buying led to prices closing back up near the opening levels, with lead the only metal holding on to a high degree of its losses, it closed down 1.7%. Copper prices closed up 0.4% at $5,529 per tonne having been down to a low of $5,419.50 per tonne. Precious metals remained under pressure, with prices closing down an average of 0.5%.

This morning in Shanghai, aluminium and nickel are both down 1.1%, the rest of the base metals are up with gains of between 0.1% for tin and 0.9% for zinc, February copper prices are up 0.6% at Rmb 45,080 per tonne. Spot copper in Changjiang is little changed at Rmb 44,760-44,960 per tonne, the spread with the February contract is at an equivalent of $17 per tonne contango and the LME/Shanghai copper arb ratio is at 8.15.

In other metals in China, steel rebar prices are down 3.9%, gold prices are little changed and silver prices are off 0.2%. In international markets, spot crude oil prices are off 0.1% at $54.77 per barrel.

Equities consolidated yesterday with the Euro Stoxx 50 little changed and the Dow closed off 0.1% at 19,919 – the 20,000 level remains elusive, with the high so far being 19,987.63. Italy’s bailout of Monte dei Paschi should provide some relief for markets. In Asia this morning, the Hang Seng is off 0.3%, the CSI 300 is off 0.8%, the ASX 200 is down 0.3% and the Kospi is little changed.

In FX, the dollar index is consolidating in high ground, yesterday’s dip to 102.59 on disappointing US data, attracted buying with the index recently quoted at 103.03. The euro at 1.0441 is up from recent lows, sterling is drifting lower at 1.2288, the yen is consolidating at 117.46, as is the aussie at 0.7215. The yuan at 6.9314 and other emerging market currencies are for the most part consolidating.

Economic data already out shows a slight improvement in Germany’s GfK consumer climate and a 0.4% rise in French consumer spending – data out later includes UK current account, final GDP reading, index of services and revised business inventories, while US data includes new home sales and University of Michigan consumer sentiment and inflation expectations – see table below for more details.

Base metals prices seem to be consolidating as profit-taking and bargain hunting are leading to choppy trading. The overall underlying trends seem to remain bullish, but short term profit-taking ahead of year-end seems to be weighing on prices. The metals holding up the best are aluminium and tin. With the Christmas and New Year holidays ahead we would expect more choppy trading, especially as liquidity is likely to shrink too. Overall, sentiment seem to be bullish for 2017.

Precious metals remain on a back footing although downward momentum has slowed, but there is just a lack of buying around while other broader markets remain buoyant and optimism for 2017 remains high.  

 

Overnight Performance
GMT 07:11 +/- +/- % Lots
Cu 5534 5 0.1% 2765
Al 1719.5 -4.5 -0.3% 609
Ni 10680 -105 -1.0% 594
Zn 2622 -12 -0.5% 1781
Pb 2138 4.5 0.2% 185
Sn 20845 -155 -0.7% 19
  Average   -0.4%         5,953
Gold 1130.9 2.5 0.2%  
Silver 15.802 -0.008 -0.1%  
Platinum 906.8 1.8 0.2%  
Palladium 655.6 1.6 0.2%  
  Average PM   0.2%  

 

SHFE Prices 07:11 GMT RMB Change % Change
Cu 45080 270 0.6%
AL  12710 -145 -1.1%
Zn 21265 190 0.9%
Pb 18265 85 0.5%
Ni 90420 -1000 -1.1%
Sn 144090 200 0.1%
Average change (base metals) 0   0.0%
Rebar 2989 -121 -3.9%
Au 263.9 0.05 0.0%
Ag 4006 -7 -0.2%

 

Economic Agenda
GMT Country Data Actual Expected Previous
All Day Japan
Bank Holiday
     
7:00am Germany
GfK German Consumer Climate
9.90 9.80 9.80
7:45am France
French Consumer Spending m/m
0.4% 0.1% 0.8%
 9:30am UK
Current Account
  -28.3B -28.7B
 9:30am UK
Final GDP q/q
  0.5% 0.5%
 9:30am UK
Index of Services 3m/3m
  0.9% 0.8%
 9:30am UK
Revised Business Investment q/q
  0.9% 0.9%
3:00pm US 
New Home Sales
  575K 563K
3:00pm US 
Revised UoM Consumer Sentiment
  98.20 98.00
3:00pm US 
Revised UoM Inflation Expectations
    2.3%