METALS MORNING VIEW 24/11: Metals prices firm, strong PMI data supportive

Base metals prices on the London Metal Exchange are for the most part stronger this morning, Friday November 24. The exception is zinc, where prices are off by 0.1%, while the rest are up by between 0.2% for tin prices and 1.1% for nickel prices, with copper prices up by 0.3% at $6,992 per tonne.

Volume has been average with 6,090 lots traded as of 07.04am London time.

This follows a generally positive day on Thursday where lead prices closed off by 0.2%, while the rest were up by an average of 0.4%, led by 0.5% gains in copper and nickel prices.

Spot gold prices are little changed at $1,291.02 per oz this morning, while the rest of the precious metals are up by 0.2-0.3% - this follows a generally quiet performance on Thursday where gold, silver and platinum closed little changed, while palladium prices extended gains, climbing 0.6% to $1,010 per oz.

On the Shanghai Futures Exchange today, the base metals complex is split into two camps with nickel prices (+1.3%) leading on the upside, followed by tin prices (+0.7) and copper prices (+0.6%) at 54,370 yuan ($8,252) per tonne. Meanwhile, the rest are weaker with aluminium prices down by 0.1%, zinc prices off by 0.4% and lead prices are down the most with a 0.6% decline. Spot copper prices in Changjiang are up by 0.1% 53,890-54,010 yuan per tonne, suggesting the futures have picked-up strength since spot prices were set. The LME/Shanghai copper arbitrage ratio has eased to 7.77, compared with 7.79 on Thursday.

In other metals in China, iron ore prices are up by 1.6% to 495.50 yuan per tonne on the Dalian Commodity Exchange, steel rebar prices on the SHFE are off 0.4% and SHFE gold and silver prices are little changed.

In international markets, spot Brent crude oil prices are up by 0.17% at $63.51 per barrel. The yield on US ten-year treasuries is firmer at 2.34% and the German ten-year bund yield is at 0.36%.

Equities in Asia this morning are generally stronger with China’s CSI 300 avoiding follow-through weakness after Thursday’s steep sell-off - the index is up by 0.4% this morning. The Hang Seng is up by 0.51%, the Nikkei is up by 0.12%, the Kospi is up by 0.28%, while the ASX 200 is off by 0.06%. This morning’s strength follows on from firmer equities in Europe on Thursday where the Euro Stoxx 50 closed up by 0.26% at 3,572.07.

The dollar index set a low of 93.07 on Thursday and was recently quoted at 93.24, so remains on a back footing - we wait to see if the recent downward trend has further to go. Conversely, the euro at 1.1839 is firm, while sterling (1.3294), the yen (111.49) and the Australian dollar (0.7612), are consolidating recent strength, which suggests the dollar may have found support for now.

The yuan at 6.6022 is weaker again, after a show of strength earlier in the week, while the other emerging currencies we follow are also consolidating their recent gains.

Today’s economic data includes Japan’s flash manufacturing PMI that came in at 53.8, from 52.8 previously. Later there is data on German Ifo business climate, UK high street lending and US flash manufacturing and services purchasing managers’ indices (PMI). So far, Japan’s and Thursday’s European PMI data is supporting the view of improving concerted global growth, which bodes well for metals’ demand.

Copper’s latest rebound briefly paused on Thursday but had resumed by the close and prices are working higher again this morning. Indeed all the metals, with the exception of tin, are looking stronger and well placed to push higher. Overall, with prices already in high ground we expect rangebound trading, but after the recent weakness there may be room to challenge the top of the ranges again.

Gold, silver and platinum prices have found bases and look set to remain rangebound for now. The weaker dollar of late has helped underpin a firmer tone, but if the dollar starts to work higher again then that is likely to weigh on bullion prices. Palladium prices are back above $1,000 per oz, we would not be surprised to see more supply up in this area.

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

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