Base metals rebound after Wednesday’s dip

The base metals consolidated yesterday at lower numbers with three-month prices off an average of 0.6 percent on the back of a general day of risk-off across markets. Precious metals, however, were more upbeat closing up an average of 0.5 percent, with spot gold prices up 0.8 percent at $1,298.30 per oz, silver prices up 0.8 percent, while the PGMs were little changed.

This morning, the base metals are up an average of 0.5 percent with gains being seen across the board ranging from 0.1 percent for aluminium and 1.1 percent for zinc. Three-month copper prices are up 0.2 percent at $4,914 per tonne. Volume on the LME has been higher than average with 7,034 lots traded as of 07:24 GMT.

Precious metals prices are mixed this morning, with spot gold prices up 0.3 percent at $1,302 per oz, silver prices off 0.4 percent, platinum prices down 0.3 percent and palladium prices up 0.4 percent.

In Shanghai, the January base metals prices are up 0.3 percent on average, aluminium is the only metal showing a loss, it is down 0.2 percent, the rest are up between 0.1 percent for nickel prices and 0.6 percent for lead and zinc prices. Copper prices are up 0.4 percent at Rmb 38,960 per tonne.  Spot copper prices in Changjiang are down 0.3 percent at Rmb 38,900-39,020 per tonne, the spread between spot and the January contract is at an equivalent to $8 per tonne, while the LME/Shanghai copper arb ratio has narrowed to 1:7.93.

In other metals in China, January iron ore futures are up 0.3 percent, January steel rebar prices up 1.7 percent and gold and silver prices up 0.7 and 0.2 percent respectively. In international markets, spot Brent crude oil prices are little changed at $47.20.

Equities were weaker yesterday with the Euro Stoxx 50 off 1.4 percent and the Dow closed down 0.4 percent. In Asia this morning, equities are mixed – the Nikkei is down 1.8 percent, the Hang Seng is off 0.4 percent, the ASX 200 is off 0.1 percent but the Kospi is up 0.3 percent and the CSI 300 is one percent higher.

In FX, the dollar is retreating on the back of political uncertainty in the US with the dollar index recently quoted at 97.12. The euro is rallying, it was recently quoted at 1.1115, sterling is firmer at 1.2345, as are the yen at 102.71 and the aussie at 0.7670. The yuan at 6.7598 is firmer, while the real and rouble are weaker and the rand is firmer.

The economic agenda is busy today, China’s Caixin services PMI climbed to 52.4 from 52, later there is data on unemployment in Spain, Italy and the EU, UK services PMI, there is the Bank of England’s interest rate decision, updates on monetary policy and statement and US data includes Challenger job cuts, initial jobless claims, non-farm productivity and labor costs, services PMI, factory orders and natural gas storage. In addition, there is a UK High Court ruling on the Brexit procedure and UK’s Monetary Policy Committee member Sir Jon Cunliffe is speaking – see table below for more details.

The base metals are looking firmer again after yesterday’s dip, which may well have been option-declaration related. Copper, which has been one of the laggards this year, is looking stronger with prices overcoming some resistance levels that have been quite dominant. In the other metals, the recent dips have attracted buying and most look well placed to push higher, although the likes of zinc and aluminium that have already done a lot on the upside may attract more scale up selling.

Political uncertainty and the weaker dollar are helping to underpin the rebound in gold prices and with a base in place the weaker prices, compared with the June-August highs, may well be attracting a pick-up in physical buying.

 

Overnight Performance
GMT	07:24	+/-	+/- %	Lots
Cu	4914	8.5	0.2%	1995
Al	1719	2	0.1%	1181
Ni	10415	75	0.7%	1289
Zn	2453	27	1.1%	2255
Pb	2075.5	9.5	0.5%	302
Sn	20840	70	0.3%	12
	Average		0.5%	7,034
Gold	1302.09	3.79	0.3%
Silver	18.471	-0.074	-0.4%
Platinum	988.5	-2.5	-0.3%
Palladium	629.2	2.2	0.4%
	Average PM		0.0%

 

SHFE Prices 07:25 GMT	RMB	Change	% Change
Cu	38960	140	0.4%
AL	13420	-25	-0.2%
Zn	19670	120	0.6%
Pb	16625	105	0.6%
Ni	83320	100	0.1%
Sn	137370	420	0.3%
Average change (base metals)	0		0.3%
Rebar	2673	44	1.7%
Au	284.05	2.1	0.7%
Ag	4175	10	0.2%

 

Economic Agenda
GMT	Country	Data	Actual	Expected	Previous
2:45am	China	Caixin Services PMI	52.40	52.50	52.00
9:00am	Spain	Spanish Unemployment Change		77.3K	22.8K
10:00am	EU	ECB Economic Bulletin
10:00am	Italy	Italian Monthly Unemployment Rate		11.4%	11.4%
10:30am	UK	Services PMI		52.4	52.6
11:00am	EU	Unemployment Rate		0.10	0.10
11:00am	UK	EU Membership Court Ruling
12:30pm	US	Challenger Job Cuts y/y			-24.7%
1:00pm	UK	BOE Inflation Report
1:00pm	UK	MPC Official Bank Rate Votes		0-0-9	0-0-9
1:00pm	UK	Monetary Policy Summary
1:00pm	UK	Official Bank Rate		0.3%	0.3%
1:00pm	UK	Asset Purchase Facility		435B	435B
1:00pm	UK	MPC Asset Purchase Facility Votes		0-0-9	0-0-9
1:30pm	UK	BOE Gov Carney Speaks
1:30pm	US	Unemployment Claims		258K	258K
1:30pm	US	Prelim Nonfarm Productivity q/q		1.7%	-0.6%
1:30pm	US	Prelim Unit Labor Costs q/q		1.3%	4.3%
2:45pm	US	Final Services PMI		54.8	54.8
3:00pm	US	ISM Non-Manufacturing PMI		56.2	57.1
3:00pm	US	Factory Orders m/m		0.2%	0.2%
3:30pm	US	Natural Gas Storage		55B	73B

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