Metals edge higher is

After consolidating at the end of last week having seen some weakness mid-week, the three-month base metals prices are for the most part slightly firmer this morning, the exception is tin that is off 0.3 percent. The rest are up an average of 0.8 percent, led by a 1.8 percent rise in nickel and 1.2 percent in lead, copper prices are little changed at $4,792 per tonne.

The precious metals started to consolidate on Friday after breaking lower last Tuesday. This morning spot precious metals prices are up an average of 1.1 percent, with palladium up two percent and gold prices up 0.4 percent at $1,263 per ounce.

In Shanghai, December copper and tin are down around 0.3 percent, while the rest of the December base metals contracts are up an average of 1.7 percent, led by a 2.9 percent gain in lead and 2.6 percent gain in aluminium. Copper is last at Rmb 37,560 per tonne, while spot copper in Changjiang is off 0.3 percent at Rmb 37,700-37,820 per tonne. The spread between the spot copper and the December futures contract is at an equivalent of $38 per tonne back, while the LME Shanghai copper arbitrage is at 7.83.

In other metals in China, SHFE January steel rebar is unchanged, December gold is off 3.9 percent and December silver is down 6.7 percent. In international markets spot Brent crude is strong at $51.47.

Equities were weaker on Friday, the Euro Stoxx 50 closed off 0.7 percent and the Dow closed off 0.2 percent. In Asia this morning, the Nikkei and Hang Seng are closed, the ASX 200 is up 0.2 percent, the Kospi is up 0.1 percent and China’s CSI 300 is up one percent.

In FX, the dollar index is consolidating around 96.58, having traded above 97 on Friday in the aftermath of the spike down in sterling. Sterling is last at 1.2390 and is looking weak, the euro is steady at 1.1185, the yen is firmer at 102.94, as is the aussie at 0.7600. The yuan has opened up weaker, last at 6.7000, most of the other emerging market currencies we follow are flat, although the rouble is firm at 62.1300.

On the economic data front, Saturday saw the release of the Caixin services PMI that edged lower to 52.0 from 52.1, this morning Germany’s trade balance was stronger than expected and later there is data out on Italian industrial production and EU Sentix investor confidence – see table below for more details.

For the most part, the base metals are holding up well and there is some buying showing up again. In addition, most of the base metals are well placed to push higher. With China back in the market and adding to volume and with generally some better economic news around, we remain quietly bullish for the base metals.

The precious metals have been under pressure but they are now finding some support, we wait to see if the sell-offs last week turn into downward spikes, or whether prices now consolidate as they adjust to the lower prices. Judging by the Fed Fund futures the market has raised its expectations for a 25 basis point rise in December to 60 percent from 55.1 percent, this may way on gold prices.

 

 

SHFE Prices 06:57 BST	RMB	Change	% Change
Cu	37560	-130	-0.3%
AL	12850	330	2.6%
Zn	18380	150	0.8%
Pb	15695	435	2.9%
Ni	81780	470	0.6%
Sn	127940	-560	-0.4%
Average change (base metals)	0		1.0%
Rebar	2264	0	0.0%
Au	273.55	-11.2	-3.9%
Ag	3983	-287	-6.7%

 

Economic Agenda
BST	Country	Data	Actual	Expected	Previous
Saturday	China	Caixin Services PMI	52		52.1
All Day	Japan	Bank Holiday
7:00am	Germany	German Trade Balance	22.2B	19.3B	19.4B
9:00am	italy	Italian Industrial Production m/m		-0.2%	0.4%
9:30am	EU	Sentix Investor Confidence		6.2	5.6
All Day	US	Bank Holiday

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