METALS MORNING VIEW 24/03: Metals consolidate, PMI data may provide direction

The base metals are slightly weaker this morning, Friday March 24, with London Metal Exchange prices down an average of 0.3% as of 06:20 GMT.

Zinc prices are unchanged at $2,824.50 per tonne, aluminium and tin prices are off 0.2%, while copper leads the drop with a 0.6% fall to $5,817 per tonne. Volume has been average with 5,857 lots traded as of 06:20 GMT. On Thursday, the base metals were in two camps – copper and aluminium prices closed up 0.3%, the rest were unchanged to lower with an average loss of 0.7%, led by a 1.4% drop in zinc prices.

Gold prices are off 0.2% this morning at $1,243.05 per oz, silver and platinum prices are slightly weaker too, while palladium prices have pushed higher through resistance and are up 0.5% at $802.1 per oz. On Thursday, the precious metals complex rallied an average of 0.5%, led by a 1.7% rise in palladium prices.

In Shanghai, base metals traded on the Shanghai Futures Exchange are for the most part weaker, copper prices are little changed, with a 10 yuan gain to 46,970 yuan per tonne. The rest are down an average of 0.8%, led by a 1.7% drop in lead prices, lead being the metal that was up the 2.3% at this time on Thursday morning. Spot copper prices in Changjiang are down 0.2% at 46,650-46,850 yuan per tonne, while the LME/Shanghai copper arb ratio has fallen to 8.06, meaning that SHFE prices are falling at a faster pace than LME prices.

In other metals in China, September iron ore prices are off 0.2% on the Dalian Commodity Exchange, on the SHFE, steel rebar prices are off 0.4%, gold prices are down 0.2% and silver prices are off 0.1%.

Equities in Europe rebounded on Thursday with the Euro Stoxx 50 closing up 0.9%, while the main US equity indices closed down around 0.1%. In Asia this morning, equities are for the most part bullish with the Nikkei up 0.9%, the CSI 300 and ASX 200 are up 0.8%, while the Hang Seng is little changed and the Kospi is down 0.2%.

In FX, the dollar index is slightly off recent lows, but at 99.98 is still below the 100 level and therefore is looking weak, the euro is at 1.0765, the sterling is slightly weaker at 1.2475, while the yen is firmer at 111.47 and the Australian dollar is little changed at 0.7617. The yuan is at 6.970 and the other emerging market currencies we follow are little changed.

The economic agenda is busy with flash manufacturing and services data out across the developed world – Japan’s manufacturing PMI fell to 52.6, from 53.3 in February, later there is PMI data out across Europe and the USA. In addition, there is data on UK mortgage approvals and US durable goods orders – see table below for more details.

The base metals are for the most part still consolidating as there appears to be overhead supply and while consumers are prepared to buy dips they do not seem to feel the need to chase prices higher. Reports that that the strike at Escondida will end may well weigh on copper sentiment for a while. This, combined with funds that have stale long positions, plus high levels of cathode stocks, could lead to further weakness, but overall we think the global economy is gaining momentum and that should be good for demand and there may still be restocking to be done once seasonal demand picks up in the second quarter. As such, we would avoid getting too bearish as we expect dips will run into good support.

Gold prices are holding up well, the bout of risk-off of late has underpinned prices, but overall investment confidence seems to remain bullish and that may prove a headwind for gold prices, although geopolitical heat is likely to turn up as the French election approaches.

What to read next
The price of tin on the London Metal Exchange has reached highs in April 2024 not seen since 2022, with investors betting on the metal having a significant role in the expansion of renewable energy and for technical purposes, while supply remains uncertain
Nickel premiums stayed flat around the world amid quiet trading in the week to Tuesday April 9.
Stocks of base metals in Shanghai bonded warehouses showed mixed fortunes in March, Fastmarkets has learned
Recent developments in the aluminium industry have provided incremental steps toward the industry’s decarbonization, but green energy sources, inert anodes and end-of-life scrap recycling can offer disruptive advances to achieve this goal, according to Peter von Czarnowski, director of casting technology expansion at Golden Aluminum.
The low-carbon differential for aluminium P1020 in Europe was unchanged in the month to Friday April 5, with market participants reporting decreased interest in low-carbon units.
With excerpts from our quarterly tin round up, we share why we were bullish with our tin price forecast in the first quarter of 2024