MORNING VIEW: Base metals prices more upbeat than of late, led by aluminium

Base metals prices on the London Metal Exchange have been edging higher in recent days, although this morning, Thursday April 15, they were looking mixed, while those on the Shanghai Futures Exchange were for the most part firmer.

  • Concerns over China’s policy on credit tightening in focus ahead of Friday’s gross domestic product (GDP) data
  • Aluminium sets fresh highs for the year

Base metals
LME three-month base metals prices were mixed this morning with copper up by 0.3% at $9,108 per tonne, zinc down by 0.4% at $2,819.50 per tonne and nickel down by 1.6% at $16,100 per tonne, while the rest were little changed. Aluminium, although only up by 0.2% at $2,332 per tonne this morning, is the only metal pushing the envelope on the upside.

The most-active base metals contracts on the SHFE were mainly upbeat this morning, the exception was June nickel that was down by 0.7%, while the rest were up by an average of 1%, led by a 1.8% rise in June copper that was recently up 1.8% at 67,470 yuan ($10,322) per tonne. While LME copper stocks might be rising, the main copper story seems to be the concentrate shortage.

Precious metals
Spot gold prices were up by 0.4% at $1,743.14 per oz this morning, while the rest of the precious metals were up by an average of 0.5%.

Wider markets
The yield on US 10-year treasuries has edged higher to 1.63% this morning, from 1.62% at a similar time on Wednesday – the recent high was just shy of 1.78% on March 30.

Asian-Pacific equities were mixed on Thursday: the CSI 300 (-0.94%), the Hang Seng (-0.844%), the ASX 200 (+0.51%), the Kospi (+0.44%) and the Nikkei (+0.04%).


The US Dollar Index is consolidating this morning but the overall trend is downward; it was recently at 91.67, having turned lower from 93.44 at the end of March.

Although the other major currencies are also consolidating this morning, they have generally been on a front footing in recent days: the euro (1.1972), sterling (1.3780), the yen (108.91) and the Australian dollar (0.7719).

Key data
Key data already out this morning showed German final consumer prices (CPI) climbed by 0.5% month on month in March, compared with gains of 0.7% in February and 0.8% in January.

Later there is data on French CPI and a barrage of US data including retail sales, the Philly Fed and Empire State manufacturing indices, initial jobless claims, industrial production, capacity utilization, the Conference Board leading index, business inventories, the housing market index from the National Association of Home Builders (NAHB) and Treasury International Capital (TIC) long term purchases.

In addition, Federal Open Market Committee members Raphael Bostic and Mary Daly are scheduled to speak.

Today’s key themes and views
With the exception of nickel, the rest of the base metals are looking more upbeat suggesting little appetite to sell, or go short. The weaker dollar may be helping, as is the overall longer-term outlook that is supported by the combination of the promised infrastructure spending and the past seven to eight years of low capital expenditure in mining. While we are medium/long-term bullish we also see potential downside risks in the short term on the back of credit tightening in China, or as a result of a broader-based equity correction.

Gold’s rebound on Tuesday looks quite constructive – a weaker dollar and easier bond yields no doubt providing some support. But, key will be whether investors feel the need to take refuge in havens anytime soon.

What to read next
US President Joe Biden will increase tariffs on Chinese imports including steel and aluminium, electric vehicles, semiconductors and advanced batteries, to counteract China’s “unfair” trading practices, he announced on Tuesday May 14
Fastmarkets launched a new price assessment for MB-GER-0006 germanium dioxide, in-whs China, on Friday May 10.
Anglo American's rejection of takeover bids by BHP has put copper firmly under the spotlight, but what challenges lie ahead for the red metal as the corporate tussle continues?
Copper fabricators in China and the wider Southeast Asian region continue to feel the pain of high copper prices on futures exchanges and a lack of new orderbooks, with some having already asked for a postponing of shipments of long-term copper cathodes, sources told Fastmarkets in the week to Wednesday May 15
The US government announced on Tuesday May 14 that new Section 301 import tariffs will be imposed on a wide range of Chinese products and materials, including electric vehicles, steel and aluminium, semiconductors, batteries, solar cells and permanent magnets
During Aemetis' quarterly earnings presentation, CEO Eric McAfee highlighted the inadequacies of current US tax credits for Sustainable Aviation Fuel (SAF) and emphasized the need to extend Section 40B.