METALS MORNING VIEW 10/04: Metals remain on a back footing

Base metals prices on the London Metal Exchange remain under pressure this morning, Monday April 10, with three-month prices down an average of 0.2%.

Zinc and lead prices are up marginally, while copper and nickel prices lead with declines of 0.6% and 0.5%, respectively. Three-month copper prices were quoted at $5,813 per tonne as of 06:45 BST and volume across the base metals has been above average with 7,105 lots traded.

Spot gold prices are up 0.1% this morning at $1,254.44 per oz, this follows a 0.2% gain on Friday, palladium prices are off 0.4% at $797.80 per oz, while silver and platinum prices are little changed.

In Shanghai this morning, base metals prices are for the most part weaker, nickel prices are bucking the trend with a 0.3% gain, while the rest are down an average of 1.6% ranged between a 3.8% fall in lead prices and a 0.1% fall in aluminium prices. Copper prices are off 1.3% at 47,030 yuan per tonne. Spot copper prices in Changjiang are off 1% at 46,920-47,120 yuan per tonne and the LME/Shanghai copper arb ratio has eased to 8.02.

In other metals in China, September iron ore futures continue to weaken; they are down 1.9% on the Dalian Commodity Exchange. While on the SHFE, steel rebar prices are up 1.5%, gold prices are down 0.4% and silver prices are off 1.8%. In international markets, spot Brent crude oil prices are up 0.5% at $55.46 per barrel and the yield on the US ten-year treasuries has edged up to 2.38%.

Equities were firmer in Europe on Friday with the Euro Stoxx 50 closing up 0.2% but disappointing non-farm employment numbers saw the Dow closed slightly lower. Asia this morning is mixed with the Nikkei up 0.8%, the Hang Seng is little changed, the ASX 200 is up 0.8%, the Kospi is down 0.8%, while the CSI 300 is off 0.1%.

The dollar index is climbing again, it was recently quoted at 101.20, the euro is little changed at 1.0590, sterling is weaker at 1.2390, the yen is strong at 111.38, while the Australian dollar is weak at 0.7493. In emerging markets, the yuan is weaker at 6.9066 and most other emerging market currencies are either flat, or weaker.

The economic agenda is fairly light today, Japan’s economic watchers sentiment dropped to 47.4 from 48.6, later there is data on Italian industrial production, EU Sentix investor confidence, US labour market conditions and this evening US Federal Reserve chairwoman Janet Yellen is speaking – see table below for more details.

The firmer tone in the base metals that was seen on Tuesday/Wednesday last week attracted selling over the last two days of the week and prices are under pressure again this morning, with lead and zinc prices looking the weakest, while the others seem to be in consolidation mode. One of the features of the base metals markets in recent months has been that the upside has been capped and that seems to remain the case. The other feature has been that dips have been supported and that now looks set to be tested again.

Gold prices got a haven boost early on Friday following the US missile strike against Syria, but prices did not hold on to the gains. As such, spot gold prices are trading sideways, while silver and palladium prices are correcting lower and platinum prices remain subdued. On balance, we expect gold prices to remain well supported as attention focuses on the French election.

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

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