METALS MORNING VIEW 13/04: Metals prices in recovery mode while geopolitical tensions ease

Bargain hunting has returned to the base metals complex in the morning of Friday April 13, lifting prices on the London Metal Exchange by 0.6% on average.

Trade tensions between the United States and China have relaxed in recent days after Chinese President Xi Jinping struck a conciliatory tone in a keynote speech. Meanwhile, US President Trump has toned down his rhetoric on military intervention in Syria.

The LME’s three-month aluminium price surged to $2,331 per tonne on Thursday, the highest since March 2012. This morning, the light metal had consolidated to $2,297 per tonne, while LME nickel was the strongest by far, up 1.4% at $13,965 per tonne. LME zinc has recovered strongly too, up 1.1% to $3,125 per tonne after the price weakness yesterday attracted dip-buying interest.

There is good two-way business, with trading volumes totaling 10,346 lots as of 7.01am London time.

With geopolitical tensions in the Middle East calming, precious metals prices have retreated. Gold prices were unchanged this morning at $1,338.43 per oz while silver is up 0.2% to $16.50 per oz. Platinum and palladium are in positive ground, up 0.3% and 0.6% respectively.

Aluminium and nickel prices led gains on the Shanghai Futures Exchange, up 1.6% and 2.1% respectively, but zinc, lead and copper prices have struggled to get into positive territory. Meanwhile, steel rebar prices on the SHFE are up by 1.4% and iron ore prices are up 1.6% at 455 yuan per tonne on the Dalian Commodity Exchange.

It was a mixed bag on the Asian equity market today, with the Nikkei and ASX 200 up 0.55% and 0.23% respectively, while the Hang Seng Index closed 0.14% lower. Minimal gains were seen across European and US equity indices which suggests market sentiment remains fragile.

Data released today showed Chinese import data rose strongly by 14.4% in March, beating both market consensus and the previous month’s number. This is an indication that domestic demand from the world’s second largest economy remains solid. But exports in March fell short of expectations, with a decline of 2.7%, raising concerns that the strong yuan and trade war tensions are negatively affecting China’s ability to sell their products.

All of the risk events that happened this week took the base metals complex on a rollercoaster of a week. Amid all the volatility, recent price moves - especially in LME aluminium and nickel - were quite encouraging. Both metals’ prices edged higher, while zinc and lead struggled to benefit. But today’s improved risk sentiment, easing geopolitical tensions and strong Chinese import trade data should allow the base metals prices to remain well bid.

That said, global risk appetite remains fragile and continues to be sensitive to President Trump’s unpredictable rhetoric. There is still a lot of fear and uncertainty and as such, we expect the precious metals complex to remain well bid as traders head into the weekend, waiting for the next tweet from President Trump.

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

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