METALS MORNING VIEW 05/03: Metals prices under pressure

Base metals traded on the London Metal Exchange are for the most part weaker this morning, Monday March 5, with the complex down by an average of 0.4%.

Nickel leads on the downside with a 1.1% fall, copper prices are down by 0.4% at $6,887 per tonne and tin is the only metal where prices are higher, up by 0.2% at $21,595 per tonne.

Volume has been high with 10,045 lots traded as of 07.30am London time.

Precious metals prices are firmer across the board this morning with prices up by between 0.2% and 0.4%, with spot gold prices last at $1,326.02 per oz.

On the Shanghai Futures Exchange, tin prices are up by 0.4%, while the rest are down between 0.6% for copper and 2% for zinc, with the former at 51,930 yuan ($8,184) per tonne. Spot copper prices in Changjiang are off by 0.4% at 51,700-51,850 yuan per tonne and the LME/Shanghai copper arbitrage ratio is at 7.53.

In other metals in China, iron ore prices are down by 3.6% at 520 yuan per tonne on the Dalian Commodity Exchange. On the SHFE, steel rebar prices are down by 1.3%, while gold and silver prices are both up by 0.7%.

In wider markets, spot Brent crude oil prices are up by 0.61% at $64.53 per barrel, while the yield on US 10-year treasuries has eased to 2.82, as has the German 10-year bund yield at 0.60%.

Equity markets in Asia are for the most part weaker this morning: Nikkei (-0.66%), Hang Seng (-2.24%), CSI 300 (+0.04%), ASX 200 (-0.57%) and the Kospi (-1.13%). This follows weakness in western markets on Friday, where in the United States the Dow Jones closed down by 0.29% at 24,538.06, and in Europe where the Euro Stoxx 50 closed down by 2.19% at 3,324.75.

The dollar index is consolidating, it was recently quoted at 90.13, this after peaking on Thursday at 90.94. The pullback in the dollar has underpinned the euro at 1.2287 and sterling at 1.3773, with the yen stronger at 105.38, but the Australian dollar is weaker at 0.7737. The yuan is flat at 6.3407, while the other emerging market currencies we follow are mixed.

Economic data out already shows a weaker Caixin services purchasing managers’ index (PMI) for China that came in at 54.2 from 54.7. Later there is services PMI data out across Europe and the United States as well as data on EU Sentix investor confidence and EU retail sales. In addition, US Federal Open Market Committee member Randal Quarles is speaking.

Base metals prices remain under pressure, the exception is tin where prices are holding up in high ground. Concerns over a slower China and the potential fallout from a US trade war are weighing on sentiment. We should now get an update on how bullish underlying support is by seeing how far prices dip and how long it is before they rebound. With most of the metals recently capped it does look as though consumers have not felt the need to chase prices higher, but we do expect them to be keen bargain hunters.

Gold prices are rebounding, concerns over a trade war and a potential hung parliament in Italy may well be boosting haven demand – we note the yen is also strong.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

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