Metals quiet, but Chinese trade imports pick-up

The base metals consolidated yesterday after recent gains, the metals closed up an average of 0.2 percent, with nickel the main gainer with a 1.1 percent rise to $10,225, while lead was the biggest faller with a 1.2 percent dropl to $1,919, tin was up 0.8 percent, the rest were little changed with copper up 0.3 percent at $4,651. Precious metals fell across the board with average losses of 0.8 percent led by a 1.3 percent decline in palladium, while gold fell 0.3 percent to $1,344.45.

This morning trading has been quiet in the base metals with just 2,376 lots traded as of 05:30 BST. Copper prices are up 0.4 percent at $4,669, little changed from this time yesterday, while tin is off 0.5 percent at $19,430 and the rest are either side of unchanged.

Precious metals are firmer this morning, with average gains of 0.5 percent ranged between little changed for platinum and 1.2 percent for palladium, silver is up 0.5 percent at $19.87 and gold prices are up 0.2 percent at $1,347.30.

In Shanghai, the base metals are generally weaker, the exception is nickel that is up 0.3 percent, the rest are down between 0.1 percent for copper (Rmb 36,710), aluminium and tin, zinc is off 0.4 percent and lead is down 0.5 percent. Spot copper in Changjiang is off 0.3 percent at Rmb 36,670-36,770, the backwardation with the futures is at an equivalent of some $9 per tonne and the LME/Shanghai copper arb ratio is easier at 7.86, which suggests the arb window has closed again.

In other metals in China, iron ore prices are off 1.9 percent, steel rebar is off 1.3 percent, perhaps the heavy industry that had to reduce output ahead of the G20 meeting are now ramping up production again, although if that were the case we would expect steel rebar to be falling, while iron ore prices to be climbing. That said, with iron ore prices around $58.30 they are higher than most expectations.  Gold prices are up 0.1 percent and silver is off 0.1 percent. In international markets, Brent crude prices are last at $48.60.

Equities were mixed with the Euro Stoxx 50 up 0.7 percent yesterday while the Dow closed off 0.1 percent. This morning Asia is mixed, the Nikkei and ASX 200 are down one percent, the Hang Seng is up 0.4 percent, the CSI 300 is off 0.1 percent and the Kospi is down 0.2 percent.

In FX, the dollar remains weak with the dollar index at 94.86, the euro is firmer at 1.1251, as are the yen at 101.57, sterling at 1.3349 and the aussie at 0.7680. The yuan is weaker at 6.6740 and the other emerging market currencies are mixed, but little changed.

The economic agenda is busy, data out already showed a slight improvement in Japan’s final GDP that rose 0.2 percent, quarter–on-quarter and its economic watchers sentiment index climbed to 45.6 from 45.1. China trade balanced was little changed at $52.1 billion as exports declined less than expected but imports unexpectedly picked-up for the first time since 2014. Data out later includes French non-farm payrolls, US initial jobless claims, crude oil inventories and consumer credit. The focus today, however, will be on the ECB interest rate decision and press conference, with all eyes on whether quantitative easing is tweaked – see table below for more details.

Copper, which has recently been one of the weaker metals, is trying to rebound, while aluminium that has also been weak is consolidating, but struggling to hold on to the gains that have been seen. Zinc and lead that have been the power-houses of late appear to have run into profit-taking and producer selling, while nickel is pushing ahead with its rebound, and tin is holding up in high ground. In tin the backwardation has eased, so we wait to see if the tightness of recent days has attracted metal into LME warehouses.

The rebound in gold prices has been strong but prices have paused ahead of resistance that looks quite formidable between $1,355 and $1,375.25, so upside progress may slow down now. But, with the dollar looking weaker, we would not be surprised to see gold prices work higher. The rest of the precious metals are following gold’s lead. 

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Source: Bullion Desk News