METALS MORNING VIEW 05/06: Metals prices off to a weak start

Base metals on the London Metal Exchange are for the most part slightly weaker this morning, Monday June 5, with prices down an average of 0.2%.

The exception is nickel, where prices are up 0.2%, while copper and aluminium prices lead on the downside with falls of 0.5% – three-month copper prices were at $5,661 per tonne at 07:10 BST. Volume has been average with 6,136 lots traded.

The precious metals are consolidating this morning, with spot gold prices up 0.1% at $1,280 per oz, this after a bullish performance on June 2 that saw the precious metals complex close with gains averaging 1.8%, with a 2.5% gain seen in platinum.

In Shanghai this morning, the base metals trading on the Shanghai Futures Exchange (SHFE) are mixed with lead and nickel prices up 2% and 0.4%, respectively, while zinc prices are down 1.3%, tin prices are down 0.6% and copper and aluminium prices are off 0.3%, with July copper recently quoted at 45,240 yuan per tonne.

Spot copper in Changjiang is little changed at 45,230-45,350 yuan per tonne and the LME/Shanghai copper arb ratio is at 7.99.

In other metals in China, September iron ore prices on the Dalian Commodity Exchange are up 2.2% at 436 yuan per tonne, while on the SHFE, steel rebar prices are down 3.1% and gold and silver prices are up 1.2% and 1.6%, respectively.

Equities ended Friday on a firmer note with the Euro Stoxx 50 closing up 0.7% and the Dow closed up 0.3% at 21,206.29 – the disappointing US employment report seems to have fuelled the rally, suggesting the market thinks the US Federal Reserve may become less hawkish. In Asia this morning, equities are generally negative with the ASX200 down 0.7%, the CSI 300 is off 0.6%, the Hang Seng is down 0.2%, the Kospi is off 0.1%, while the Nikkei up 0.1%.

The dollar index fell following the US employment reports on Friday, it set a fresh low for the year at 96.66 and was recently quoted at 96.80, so the downward trend in the index continues. The euro is firmer at 1.1265, as is the yen at 110.58, sterling is flat at 1.2867 and the Australian dollar is stronger at 0.7459.

The yuan at 6.8042 has given back some of last week’s gains, it reached 6.7211 on June 1, while most of the other emerging market currencies we follow are slightly firmer, probably in light of the weaker dollar.

The economic agenda is busy today with services Purchasing Managers’ Index (PMI) out across all regions. China’s Caixin services PMI climbed to 52.8 from 51.5 – this after four months of declines. In addition to PMI data, US data includes revised non-farm productivity, unit labour costs, factory orders and labour market conditions index – see table below for more details.

Copper prices continue to tread water either side of $5,650 per tonne and seem in no hurry to become more directional. Aluminium and tin prices are trading sideways in high ground, while lead, zinc and nickel remain in low ground and while nickel and lead may have found some support of late, zinc prices are looking weaker. Overall it does look as though the path of least resistance is to the downside with the market concerned about slower growth.

Gold prices are working higher on the back of a weaker dollar and increased political and geopolitical tensions and look well placed to close in on the April highs that were at $1,295.50 per oz. Silver and platinum are following gold’s lead, while palladium prices set fresh highs on June 2 and are holding up in high ground, this despite continuing poor auto sales data.

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

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