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Volume has been average with 8,757 lots traded as of 07.07 am London time, although half of that has been in copper.
This follows gains on Monday for all the base metals with the exception of lead that closed down by 0.8%, while the others closed with gains averaging 0.8%.
The precious metals are also firmer this morning with gains averaging 0.2%, with spot gold prices up by 0.2% at $1,325.63 per oz. This follows gains of 0.8% yesterday.
On the Shanghai Futures Exchange, the base metals are for the most part firmer, with lead prices bucking the trend with a 0.4% fall, while the rest are up by an average of 1.1%. Nickel is out in front with a 1.9% gain, followed by copper (+1.7%) at 52,240 yuan ($8,266) per tonne. Spot copper prices in Changjiang are up by 0.7% at 51,400-51,700 yuan per tonne and the LME/Shanghai copper arbitrage ratio stands at 7.54, unchanged from Monday. The fact copper future prices are up by more than spot prices, suggests the rally has continued since the spot price was established.
In other metals in China, iron ore prices are up by 1.3% at 529 yuan per tonne on the Dalian Commodity Exchange. On the SHFE, steel rebar prices are up by 0.6%, gold prices are up by 0.7% and silver prices are up by 1.1%.
In wider markets, spot Brent crude oil prices are rebounding, up by 0.52% at $62.96 per barrel, while the yield on US 10-year treasuries remains firm at 2.85%, as is the German 10-year bund yield at 0.75%.
Equities in Asia are for the most part stronger today: Kospi (+0.41%), CSI 300 (+1.17%), Hang Seng (+1.36%), ASX 200 (0.6%), while the Nikkei that was closed on Monday is off by 0.65% this morning. This follows rebounds in western markets on Monday, where in the United States the Dow Jones closed up by 1.70% at 24,601.27, and in Europe where the Euro Stoxx 50 closed up by 1.27% at 3,368.25.
The dollar index is edging lower again, it was recently quoted at 89.95, the low being 88.43 on January 25. The euro (1.2316) is working higher, sterling (1.2277) is weaker, the Australian dollar (0.7855) is consolidating and the yen (107.91) continues to strengthen. The yuan at 6.3375 is weaker, while the other emerging currencies we follow are consolidating.
The economic calendar shows data on Japanese machine tool orders, which came in slightly stronger than previously, data out later includes French private payrolls, UK consumer price index (CPI), producer price index (PPI), retail price index (RPI) and house price index (HPI) and the US small business index. In addition, US Federal Open Market Committee member Loretta Mester is speaking.
With a second day of gains getting underway in the base metals and with equities rebounding too, it does look as though the shake-out from last week may have run its course driven by dip buying. That said, further bouts of selling could emerge into the rebound, so we would expect some choppy trading for a while, especially with the Lunar New Year starting on Thursday and running until February 21. Underlying sentiment seems to be bullish, we should get an update on how bullish it is by seeing how much follow-through buying there is.
Precious metals sold off in line with the other metals but dip buying is already being seen. The shake-out in broader markets may encourage some investors to diversify their portfolios further, which could support gold.
Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.