METALS MORNING VIEW 17/07: Metals prices stronger on good Chinese data

Base metals prices on the London Metal Exchange are stronger by an average of 0.7% this morning, Monday July 17, with zinc prices leading the way with a 1.6% gain to $2,834.50 per tonne, while three-month copper prices are up 0.9% at $5,980 per tonne.

Volume has been strong with 14,946 lots traded as of 07:38 BST. This follows a generally stronger day on Friday when prices closed up an average of 1%.

Gold and the other precious metals are firmer this morning with prices up an average of 0.3%, led by a 0.5% rebound in platinum prices, while gold price are up 0.1% at $1,230.08 per oz, this after a strong performance on Friday when the complex closed up an average of 1%.

On the Shanghai Futures Exchange (SHFE), the base metals prices are up an average of 1.4%, led by a 4% rally in nickel prices, while copper prices are up 1% at 47,630 yuan ($7,032) per tonne, spot copper prices in Changjiang are up 0.9% at 47,230-47,430 yuan per tonne and the LME/Shanghai copper arb ratio is weaker at 7.96.

In other metals in China, September iron ore prices on the Dalian Commodity Exchange are up 3.2% at 495 yuan per tonne, while on the SHFE, steel rebar prices are up 2.1%, silver prices are up 1.8% and gold prices are 0.8% firmer.

In international markets, spot Brent crude oil prices are little changed at $48.99 per barrel and the yield on the US ten-year treasuries has eased to 2.33%, while the German ten-year bund yield is stronger at 0.59%.

Equities were split on Friday with the Euro Stoxx 50 closing off up 0.1% but the Dow closed up 0.4% at 21,637.74. In Asia this morning, the Nikkei up 0.1%, the Hang Seng is up 0.3% and the Kospi is up 0.4%, while the CSI 300 and ASX 200 are down 1.2% and 0.2%, respectively.

The dollar index at 95.25 is continuing to weaken, while the euro remains upbeat at 1.1453, as are sterling at 1.3095 and the Australian dollar at 0.7809 and the yen is firmer at 112.65.

The yuan is looking stronger again at 6.7722, as are most of the emerging market currencies we follow, especially the real, rand and peso.

Data out already shows better-than-expected data out of China with gross domestic product (GDP) holding up at 6.9%, industrial production rising 7.6%, retail sales rising 11% and fixed asset investment unchanged at 8.6%. Later there is data on EU CPI and US Empire State manufacturing index.

Copper and nickel prices have taken over from zinc as the metals leading on the upside, but all are looking brighter and well placed to rally, helped by stronger Chinese data and the weaker dollar. Overall, we remain quietly bullish for the base metals.

Gold prices have firmed up in recent days, this despite geopolitical concerns being light but the weaker dollar and a less hawkish US Federal Reserve seem to be underpinning price rises. All in all, we are not expecting much from the precious metals camp in the short term, but we expect dips to remain supported.

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

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