METALS MORNING VIEW 11/05: Metals prices attempt a rebound

Base metals prices on the London Metal Exchange are up by an average of 0.2% this morning, Thursday May 11, ranged between up 0.2% for aluminium and down 0.7% for nickel – three-month copper prices are up 0.5% at $5,537 per tonne. Volume has been average with 5,493 lots traded as of 07:01 BST.

This follows a split day on Wednesday that saw lead prices up 1%, tin and copper prices little changed, while aluminium, zinc and nickel were down between 0.3 and 0.9%.

Palladium prices lead on the upside this morning with gains of 1% taking spot prices to $801.70 per oz, platinum prices are up 0.8%, silver prices are up 0.6% and gold prices are up 0.3% at $1,211.90 per oz. This comes after a generally weak performance on Wednesday, when gold, silver and palladium prices were down 0.3% on average but platinum bucked the trend with a 0.4% rise.

In Shanghai this morning, zinc and lead prices on the Shanghai Futures Exchange are up 0.1% and 0.7%, respectively, copper and aluminium are off slightly with losses of 0.1% and 0.2%, respectively, with copper at 44,900 yuan per tonne, while nickel and tin prices are both down 0.8%.

The LME/Shanghai copper arb ratio is weaker at 8.114. Spot copper prices in Changjiang are up slightly at 44,890-45,040 yuan per tonne.

In other metals in China, September iron ore prices remain under pressure with prices down 3.9% at 452.50 yuan per tonne on the Dalian Commodity Exchange, while on the SHFE, steel rebar prices are down 2.3%, gold prices are up 0.1% and silver prices are up 0.5%

In international markets, spot Brent crude oil prices are up 0.4% at $50.47 per barrel and the yield on the US ten-year treasuries is firmer at around 2.40%.

Equities on Wednesday were slightly weaker, the Euro Stoxx 50 closed down 0.1% and the Dow closed down 0.2% at 20,943. But, Asia this morning is more upbeat, with the Nikkei and Hang Seng up 0.3%, the Kospi is up 1.1%, the ASX 200 is up 0.1% and CSI 300 is little changed.

The dollar index got some lift on Monday May 8, and follow through firmness has taken it to 99.58 this morning. Conversely, the euro is off recent highs, it was recently quoted at 1.0878, the sterling is flat at 1.2948, as is the yen at 114.13 and the Australian dollar is rebounding – last at 0.7634, having been as low as 0.7328 in recent days.

In emerging market (EM) currencies, the yuan is firmer at 6.9088, while all the other EM currencies we follow are firmer too having seen some slight weakness in recent days.

The economic agenda is busy today, Japan’s bank lending held steady at 3%, economic watchers sentiment climbed to 48.1 from 47.4 previously, German WPI climbed 0.3%, having been flat, later there is an ECB economic bulletin and EU economic forecast, a string of UK manufacturing, industrial, construction and trade data, plus the Bank of England’s rate decision, latest money policy statement and there is also a UK GDP forecast, with US data including PPI, initial jobless claims and natural gas storage. In addition, US Federal Open Market Committee (FOMC) member Willian Dudley is speaking – see table below for more details.

The base metals are trying for higher this morning, but they remain in downward trends and therefore there is a danger that these rally attempts run into further selling. That said, after a drawn out pullback at some stage bargain hunting may be more plentiful than further selling, so we wait to see how far and how long the firmer trend lasts. A firmer oil price may well help give the impression that the commodity complex is turning a corner again.

The slide in gold and silver prices may also have run their course as prices are getting some lift, platinum prices also appear to have found a base and palladium prices, that have managed to hold up well anyway, are edging higher again too. In the current climate we are not overly bullish on gold prices, but the prices pullback of late may well be enough to prompt bargain hunting, which may be enough to give prices some lift.

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

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