METALS MORNING VIEW 18/05: Metals start on a weak footing, looking vulnerable again

A weaker tone has returned to the base metals on the London Metal Exchange this morning, Thursday May 18, with all the metals prices, except tin, lower.

Those that are down, are weaker by an average of 0.7%, lead prices remain the weakest of the complex, with prices down 1.1% at $2,091.50 per tonne, basis three-months, while the rest are down between 0.4% for nickel prices and 0.8% for copper, which was trading at $5,567 per tonne at 06:02 BST. Tin prices are 0.2% firmer at $20,225 per tonne. Volume on the exchange has been average with 5,770 lots traded.

Trading on Wednesday, saw strong gains in tin, where prices closed up 1.5%, and lead where prices were up 1.2%, zinc prices were up 0.4%, while the rest were off between 0.1 and 0.4%.

Spot gold is little changed at $1,259.75 per oz this morning, silver and platinum prices are down 0.4%, while palladium prices are up 0.3%. Wednesday saw gold prices rise 1.9%, platinum prices were up 0.6%, silver prices were up 0.4%, while palladium prices dipped 1.6% to $782 per oz. The run-up in bullion prices seems mainly driven by political uncertainty in Washington DC.

In Shanghai this morning, most of the base metals trading on the Shanghai Futures Exchange are weaker, the exception is the 1.1% gain in tin prices. The rest are down by an average of 0.9%, led by a 1.5% fall in nickel prices, while copper prices are down 0.9% at 45,020 yuan per tonne. Spot copper prices in Changjiang are down 0.5% at 44,950-45,150 yuan per tonne, while the LME/Shanghai copper arb ratio is slightly easier at 8.09.

September iron ore prices are down 0.4% at 470.50 yuan per tonne on the Dalian Commodity Exchange, while on the SHFE, steel rebar prices are up 1.2%, gold prices are up 1.4% and silver prices are up 0.5%.

In international markets, spot Brent crude oil prices are off slightly at $51.93 per barrel as the market consolidates after recent gains. The yield on the US ten-year treasuries has weakened to 2.24%, again the lower yield, firmer gold and yen, all point to a pick-up in haven demand.

Equities reacted more to the political unease in the USA on Wednesday with the Euro Stoxx 50 and Dow closing down 1.6% and 1.8%, respectively, with the Dow closing at 20,606.93. Weakness has followed through to Asia this morning, with the Nikkei off 1.5%, the ASX 200 is down 1%, the Kospi is off 0.4% and the Hang Seng and CSI 300 are both down 0.3%.

The dollar index plunged for a second day on Wednesday, falling to a low of 97.33, it is steadier this morning at 97.61, but the breakdown below the support line does seem to have set a new direction for the dollar, at least for now. The euro has mirrored the dollar’s move, it has reached 1.1172, but is pausing this morning at 1.1142. Sterling is flat at 1.2962, the yen is stronger at 111.27, while the Australian dollar is stronger at 0.7453. Given the political stability in the EU, the instability in the USA and uncertainty over Brexit, we would expect the euro to outshine the pound.

The yuan is holding on to most of its gains, it was recently quoted at 6.8802, but other emerging market (EM) currencies are weaker, suggesting some risk-off and nervousness.

Data out today shows Japan’s preliminary GDP rose 0.5% in the first quarter, from 0.3% in the fourth quarter last year. GDP price index dropped 0.8%, previously it was down 0.1%. Later there is data on UK retail sales, with US data including initial jobless claims, the Philly Fed manufacturing index, leading indicators and natural gas storage. In addition, European Central Bank president Mario Draghi is speaking this evening at 6pm BST – see table below for more details.

Tin prices have broken higher, low stocks and tightness in the spread seem to have finally led to a price reaction. The other metals are looking weaker this morning, copper’s and aluminium’s grind higher over the past five trading days appears to have run out of steam, while lead, zinc and nickel prices have been sliding. Last weekend’s announcement by China about infrastructure spending seems to have been the catalyst for the metals’ consolidation/rebounds this week, but the reaction has not been universally bullish, so again it may be a case that the announcement has supported the longer term outlook, but the market needs more evidence of stronger nearby fundamentals. Another large stock increase on Wednesday in LME copper stocks was another cold-water moment for copper bulls. On balance, the base metals remain vulnerable, although tin may be able to trade its own fundamentals.

Gold prices have been leading the rebound in the precious metals sector, silver is following gold’s lead, as is platinum, while palladium has pulled back from high ground. This morning, the recent moves in the precious metals are being consolidated, but political developments in the USA are likely to underpin the rally in gold prices and we would look for dips to be well supported, especially if the dollar continues to weaken.

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

What to read next
After a month-long consultation period, Fastmarkets has discontinued this price due to low market liquidity. All short-term forecasts associated with this price (or these prices) produced by the Fastmarkets research team, if any, have also been discontinued. If you have any comments on the discontinuation of this price, please contact Natasha Porter by email at: pricing@fastmarkets.com. Please […]
This guide explores current price trends, breaks down the key copper scrap grades and provides a global outlook for 2025.
The amendment to the name of the price assessment for nickel ore 1.8% basis 15-20% Fe water content: 30-35% Si:Mg ratio<2 lot size 50,000 tonnes, cif China has been delayed following a reporter error. Fastmarkets decided to amend the name of the price assessment, shortening it to nickel ore with 1.8% nickel content, following a […]
Navigating LME nickel: A cautious optimism amid bearish sentiment
There’s broad agreement that DeepSeek has upended the artificial intelligence (AI) sector by developing a cutting-edge large language model that uses less computational power, but whether improved AI efficiency cuts demand for copper in the data centers used to power it is a matter of debate.
Aluminium demand in India is set to continue its sharp growth over the next three years, fueled by an expanding automotive sector in the South Asian country, Fastmarkets heard at the Material Recycling Association of India (MRAI) international conference held in Jaipur on January 28-30.