MORNING VIEW: LME metals mixed in quiet trade with China on holiday

Metals continue to languish in high ground during morning trading on Monday June 14, with tin being the exception as it continues to push higher on strong fundamentals due to supply disruptions.

  • Broader markets generally upbeat with some, including the S&P 500 Index, near record highs.
  • US 10-year treasury yields have fallen, not on haven buying, but because the market seems more sure that central banks will remain dovish.

Base metals
London Metal Exchange three-month base metals prices were mixed on Monday morning, with copper, nickel, zinc and lead down by an average of 0.3%; copper was at $9,965.50 per tonne at 6.18am London time, while aluminium and tin were both up by 0.7% (see table).

Chinese markets were closed in observance of the Dragon Boat Festival.

Precious metals
Spot precious metals were also mixed – gold was down by 0.6%, at $1,864.71 per oz, while the more industrial precious metals were up by an average of 0.1%.

Wider markets
The yield on US 10-year treasuries has slipped back to 1.46%. A week ago, Monday June 7, it was at around 1.57%. This is the lowest it has been since March this year.

Traders seem more relaxed that the United States Federal Reserve will give the economy enough slack to show that any inflationary pressures are transitory.

Asia-Pacific equities were stronger on Monday: the Nikkei (+0.57%), the Kospi (+0.05%), the ASX 200 (+0.13%). The Hang Seng and the CSI 300 were closed.

The US Dollar Index was holding on to last Friday’s gains on Monday morning – it was recently at 90.56. The recent range has been 89.53-90.63.

Other major currencies were weaker this morning: Sterling (1.4106), the Australian dollar (0.7703), the Japanese yen (109.74) and the euro (1.2096).

Key data
Key economic data already out on Monday showed Japan’s revised industrial production climbed by 2.9% month on month in April, after an initial reading of 2.5%.

Data on European Union industrial production and United Kingdom leading indicators is due for release later on Monday.

In addition, Bank of England governor Andrew Bailey is scheduled to speak at 2pm London time.

Today’s key themes and views
Other than tin, the other base metals were holding up well in high ground, but for the most part, there does seem to be enough overhead supply around to cap the upside. The stronger dollar is no doubt also a headwind, but the overall confidence across markets means there may well be further room on the upside, if there are no shocks to sentiment.

The background for gold is looking bullish due to the inflationary pressures and the potential for a broad-based correction, but with the broader markets still looking confident, there seems little demand for havens at present. That, combined with the firmer dollar, may keep gold on a back footing for a while.

What to read next
The US government will impose tariffs on steel and aluminium shipped from Mexico that were made elsewhere, in a bid to curb trans-shipment and excess production, the White House said in a statement on Wednesday July 10, a move widely applauded by the pair of metals industries
Norway-based aluminium producer Hydro and German car manufacturer Porsche signed a long-term agreement on Tuesday July 9 for supply of low-carbon aluminium to further decarbonize the supply chain of Porsche’s sports cars. The agreement follows the letter of intent signed in April
Fastmarkets has corrected its MB-ALU-0002 alumina index, fob Australia and its MB-ALU-0010 alumina inferred index, fob Brazil, which were published incorrectly on Monday July 8 due to an error.
Fastmarkets has corrected the rationales for its MB-LI-0033 lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price cif China, Japan & Korea and MB-LI-0029 lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea, which were published incorrectly on Tuesday July 9.
The Indonesian government is looking to ease its export ban on bauxite, sources familiar with the matter have told Fastmarkets
Price and supply were the major topics of conversation for market participants across the value chain attending Fastmarkets’ flagship Lithium Supply and Battery Raw Materials conference in Las Vegas on June 24-27