MORNING VIEW: Base metals looking robust as they tread water in high ground

The base metals remain upbeat this morning, Tuesday December 8, and the underlying story remains the same, infrastructure spending, economic recovery, a mass of liquidity and the potential for more US stimulus.

Although there are some potential headwinds – political tensions between the United States and China, a no-deal Brexit and a correction in equity prices as harder lockdowns are forced on populations while the pandemic rages on.

  • Japan’s economy watchers sentiment dropped to 45.6 in November, from 54.5 in October
  • United Kingdom starts Covid-19 vaccination program

Base metals
The three-month base metals prices on the London Metal Exchange were mixed this morning, with copper, zinc and lead down by an average of 0.4% while the rest were up by an average of 0.4%. The biggest mover was nickel that was up by 0.7% at $16,450 per tonne, while copper was down by 0.3% at $7,698 per tonne.

The most-traded base metals contracts on the Shanghai Futures Exchange were more positive than negative, with the complex up by an average of 0.9%, led by the February nickel and January lead and zinc contracts that were up between 1.8% and 2%, while January tin was up by 1%. January aluminium and copper were down by 08% and 0.7% respectively, with the latter at 56,960 yuan ($8,715) per tonne.

Precious metals
Spot gold prices were firmer this morning, up by 0.3% at $1,868.52 per oz and silver was up by 0.5% at $24.63 per oz. Palladium ($2,336.80 per oz) and platinum ($1,026.40 per oz) were down by 0.3% and 0.2% respectively.

Wider markets
The yield on US 10-year treasuries has eased back from recent highs, it was recently quoted at 0.93%, off from 0.95% at a similar time on Monday.

Asia-Pacific equities were mixed this morning: the CSI (+0.13%), the ASX 200 (+0.19%), the Nikkei (-0.3%), the Hang Seng (-0.51%) and the Kospi (-1.53%).

Currencies
The US dollar index was consolidating this morning and was recently quoted at 90.83, little changed from where it was at a similar time on Monday, but holding above last Friday’s low of 90.47.

Most of the other major currencies were off recent highs, but remain in high ground overall: the euro (1.2115), the Australian dollar (0.7414) and the yen (104.08). But sterling (1.3345) was weaker because a Brexit trade deal remains elusive.

Key data
Key data on today’s economic agenda includes French and European Union employment numbers, EU revised gross domestic product and EU and German economic sentiment readings from the Zentrum fur Europaische Wirtschaftsforschung (ZEW).

US data includes the small business index from the National Federation of Independent Business, revised non-farm productivity and revised unit labor costs.

Today’s key themes and views
Although the base metals on the LME keep looking tired, they end up managing to hold up well while they recoup energy to push higher. Given the strength of sentiment and the upward trends, the positive medium-term outlook and an extremely liquid climate, the overall upward trends could still continue, but there are risks to the downside given the gains already seen.

Gold prices have put in a strong rebound off the recent low at $1,765.50 per oz and have climbed back above their late-November breakdown level around $1,850 per oz. With broader markets continuing to experience strength and sentiment bullish, gold may struggle to trend higher, so we wait to see if it can hold on to these gains. A move above $1,900 per oz would look constructive, a move back below $1,840 per oz less so.


What to read next
The publication of Fastmarkets’ molybdenum drummed molybdic oxide – in-whs Busan, MB-FEO-0004, and in-whs Rotterdam, MB-FEO-0003 – and ferro-molybdenum 65% Mo min, in-whs Rotterdam, MB-FEO-0001, price assessments were delayed because of slow data processing on Friday May 23. Fastmarkets’ pricing database has been updated. The publication of these prices was delayed for 12 minutes. The […]
Investors in the US corn and wheat markets amassed shorts in the week to Tuesday May 13, moving corn from a net long to a net short for the first time since October, data from the Commodity Futures Trading Commission (CFTC) showed late on Friday May 16.
This price assessment aims to enhance transparency in the Indonesian coke market. Fastmarkets has observed a significant volume of Indonesian coke entering the global market in recent months, establishing Indonesia as a key exporter of coke worldwide since 2023. In the first seven months of 2024, Poland, China and Indonesia were the top three coke exporters globally.  […]
The US aluminium industry is experiencing challenges related to tariffs, which have contributed to higher prices and premiums, raising questions about potential impacts on demand. Alcoa's CEO has noted that sustained high prices could affect the domestic market. While trade agreements might provide some relief, analysts expect premiums to remain elevated in the near term. However, aluminum demand is projected to grow over the long term, supported by the energy transition and clean energy projects. To meet this demand, the industry will need to increase production, restart idle smelters and address factors such as electricity costs and global competition.
The UK’s domestic bioethanol industry could be at risk as a result of the recent trade deal announced between the UK and the US, industry members have warned.
Read Fastmarkets' monthly base metals market for May 2025 focusing on raw materials including copper, nickel aluminium, lead, zinc and tin.