METALS MORNING VIEW 21/07: Copper prices grind away at overhead resistance

Base metals prices on the London Metal Exchange are up by an average of 0.5% this morning, Friday July 21. Tin is bucking the trend with prices off 0.1% at $20,090 per tonne, while the rest have gains of between 0.4% for aluminium and 0.7% for zinc, with three-month copper prices up 0.6% at $6,009 per tonne. Copper seems to be grinding away at overhead supply.

Volume has been average with 6,334 lots traded as of 07:22 BST.

This comes after a day of consolidation on Thursday when copper, lead and tin closed slightly higher, aluminium and zinc closed off around 0.3% and nickel dropped 1.5% to $9,510 per tonne.

Gold and the rest of the precious metals are up by an average of 0.3% this morning, with spot gold prices at $1,246.44 per oz, a weaker dollar and continued choppy political waters in Washington providing support. This follows a generally firmer day on Thursday that saw platinum prices rise 0.5%, gold and silver prices close up 0.2%, while palladium dropped 1.1%

Metals prices on the Shanghai Futures Exchange (SHFE) are quite mixed this morning with nickel and tin prices down around 1% and aluminium prices off 0.2%, while lead and zinc are up 0.2% and copper prices are up 0.4% at 47,940 yuan ($7,087) per tonne. Spot copper prices in Changjiang are up 0.1% at 47,600-47,750 yuan per tonne and the LME/Shanghai copper arb ratio is weaker at 7.99.

In other metals in China, September iron ore prices on the Dalian Commodity Exchange have broken their run on the upside with a 1% dip to 520 yuan per tonne and on the SHFE, steel rebar prices are down 1.6%, but gold and silver prices are up around 0.5%.

In international markets, spot Brent crude oil prices are up 0.2% at $49.36 per barrel, the yield on US ten-year treasuries has eased to 2.25% and the German ten-year bund yield has eased to 0.52% – both suggesting a less hawkish monetary policy environment.

Equities eased on Thursday, but not by much with the Euro Stoxx 50 little changed and the Dow closed off 0.1% at 21,611.78 – the all-time high being 21,681.53. Asian markets are weaker, led by a 0.7% decline in the ASX 200, the CSI 300 is off 0.4%, while the rest we follow are off between 0.1% and 0.2%.

The dollar index continues to fall, at 94.00 it has set a fresh low, these levels were last seen in June 2016. Conversely, the euro is racing higher, it was recently quoted at 1.1664, the yen is firmer at 111.75, the weaker tone in sterling this week has halted today as the pound (1.2992) reacts to the weaker dollar, while the Australian dollar at 0.7902 is correcting after the surge seen on Tuesday. The yuan is also retreating, it was recently quoted at 6.7635 and amongst the other emerging currencies we follow the real and peso are holding on to recent gains, while the rest are fairly flat.

The economic agenda is very light with UK public sector net borrowing and Baker Hughes US oil rig count.

Copper and tin prices seem to be attempting to grind higher through overhead supply, while the scale-up selling in lead, zinc and nickel appears to have petered out this morning, although it is still early, and aluminium prices are consolidating below resistance. All the metals generally look well placed to extend gains but overhead supply may mean they struggle to do so, although the weaker dollar should provide some support.

Gold’s rebound has found new energy on the combination of the weaker dollar, which we think stems from the weak political scene in Washington and from the less hawkish US Federal Reserve stance. Silver prices are following gold’s lead, while the PGMs continue to struggle.

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

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