METALS MORNING VIEW 15/11: Metals prices rebound after dollar pulls back

Three-month base metals prices on the London Metal Exchange were up across the board by an average of 0.7% on the morning of Thursday November 15.

Zinc and nickel prices were up by the most with gains of 1.2% and 1.1% respectively, while copper was up by 0.8% at $6,149 per tonne. The others were up by between 0.2% for aluminium and 0.8% for lead.

Volume has been below average with 4,583 lots traded as at 06.52am London time.

This morning’s stronger showing comes after a generally positive performance on Wednesday when all of the base metals except lead closed higher, with the LME complex up by an average of 0.4%.

The precious metals were also firmer this morning, with spot gold prices up by 0.2% at $1,212.90 per oz.

In China this morning, base metals prices were for the most part stronger on the Shanghai Futures Exchange, with gains averaging 0.8% among the metals’ most-traded January contracts. Aluminium was the exception to the strength with a drop of 0.2%. The January copper contract increased by 0.9% to 49,410 yuan ($7,105) per tonne.

Spot copper prices in Changjiang were up by 0.3% at 49,020-49,190 yuan per tonne and the LME/Shanghai copper arbitrage ratio was stronger at 8.12, after 8.06 on Wednesday.

In other metals in China, the January iron ore contract on the Dalian Commodity Exchange was down by 0.2% at 489 yuan per tonne. On the SHFE, the January steel rebar contract was off by 0.3%.

In wider markets, spot Brent crude oil prices were firmer, up 0.83% at $66.34 per barrel. The yield on US 10-year treasuries was weaker at 3.1309%, as was the German 10-year bund yield at 0.4000%.

Asian equity markets were mixed on Thursday: the ASX 200 (0.06%), the Kospi (0.66%), Hang Seng (1.30%), the CSI 300 (1.03%) and the Nikkei (-0.20%).

This follows weaker performances in Western markets on Wednesday; in the United States, the Dow Jones closed down by 0.81% at 25,080.50, while in Europe, the Euro Stoxx 50 was down 0.60% at 3,205.36. Weaker oil prices have weighed on energy equities.

The dollar index is pulling back while it consolidates and was recently quoted at 96.83, this after a high of 97.70 on November 12. The other major currencies are rebounding: euro (1.1337), sterling (1.3018), the Australian dollar (0.7278) and the yen (113.56).

The yuan is also firmer at 6.9338 and the emerging currencies we follow are generally firmer – the exception being the ringgit.

Today’s economic agenda is fairly busy with European data that includes retail sales from the United Kingdom, the European Union’s trade balance. US releases include retail sales, the Philly Fed Manufacturing Index, the Empire State Manufacturing Index, import prices, initial jobless claims, business inventories, natural gas storage and crude oil inventories.

In addition, US Federal Open Market Committee members Randal Quarles and Raphael Bostic and US Federal Reserve chair Jerome Powell are speaking.

The base metals prices are working higher this morning this after further weakness in Western equities on Wednesday, although a pullback in the dollar may be providing some support. So for now in the absence of positive trade news we expect range trading to dominate – the exception is tin that is looking well placed to break up through resistance at $19,415 per tonne, which would then signal an uptrend is underway.

The slightly weaker dollar has lifted precious metals, providing a higher base for most precious metals, although the spot silver price did set a fresh low multi-year low at $13.89 per oz.

London Metal Exchange, base metals prices, precious metals prices

Shanghai Futures Exchange, base metals prices, precious metals prices

economic data