Quiet to slightly firmer start to the week for metals prices

Jan 9, 2017 - 8:05 AM GMT
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Base metals are for the most part firmer this morning January 9, lead and nickel prices lead with 0.6% gains, zinc prices are up 0.5%, three-month copper prices are up 0.3% at $5,613 per tonne, while tin prices are off 0.4% and aluminium prices are down 0.3% – volume is light with 4,834 lots traded of 07:00 GMT. Precious metals are split between bullion prices that are little changed, with spot gold prices at $1,173.79 per oz, while the PGMs are up with palladium prices 1.7% higher at $766.60 per oz and platinum prices that are up 0.8% at $972.40 per oz.

On Friday January 6, the base metals closed up an average of 0.7% led by a 1.4% gain in lead prices to $2,069.60 per tonne, aluminium prices closed up 1.1%, while the rest closed up between 0.1% for tin prices and 0.7% for zinc prices – copper prices closed up 0.2% at $5,595 per tonne.

In Shanghai, base metals prices are up an average of 0.5% this morning, led by a 1.2% rise in nickel prices, with zinc prices up 1.1%, lead prices up 0.6%, tin prices up 0.15 and copper prices up 0.3% at Rmb 45,560 per tonne – aluminium is the only one bucking the trend with a 0.3% price decline. In Changjiang, spot copper prices are 0.4% higher at Rmb 45,360-45,480 per tonne, that puts the spread between spot and March contact at an equivalent of $12 per tonne contango, while the LME/Shanghai copper arb is at 8.11.

In other metals in China, May iron ore prices are up 4.5% on the Dalian Commodity Exchange, on SHFE, steel rebar prices are up 0.8%, gold prices are up 0.1% and silver prices are off 0.3%. In international markets, Brent crude oil prices are little changed at $56.85 per barrel.

Equities closed firmer on Friday January 6, the Euro Stoxx 50 was up 0.1%, the Dow closed up 0.3% at 19,963.80 – the high nudged up to 19,999.63. In Asia this morning January 9, the markets are if anything firmer, the Nikkei is closed, the Hang Seng and Kospi are little changed, the CSI 300 is up 0.3% and the ASX 200 is up 0.9%.

In FX, the dollar index is rebounding again, it was recently quoted at 102.35, this despite a weaker than expected US employment report of Friday, but the report was generally thought to show a healthy economy, especially with average hourly earnings rising more than expected.  The firmer dollar has halted the rebounds in other currencies with the euro at 1.0537, sterling at 1.2173 and the yen at 117.36, while the aussie is treading water at 0.7316. The yuan, having strengthened last week, is weakening again this morning with the yuan at 6.8755 – other emerging market currencies we follow are looking slightly weaker too.

Data out today shows German industrial production climbed 0.4%, which was down from the 0.7% expected, while the country’s trade balance climbed more than expected. Data out later incudes UK house prices, Italian unemployment rate, EU Sentix investor confidence, US labor market conditions and consumer credit – see table on right for more details.

Base metals prices are looking more upbeat generally – since the start of the year we have seen prices start to rebound, then consolidate and most are now looking as if they are going to edge higher again. Nickel looks the strongest, followed by lead and zinc, while copper and aluminium seem in neutral and tin continues to trade in its sideways range. The stronger dollar may well be acting as a headwind and with the US inauguration just eleven days away the window of opportunity to become more directional may not be that big – we expect markets to move into consolidation mode ahead of the inauguration. We expect unerlying sentiment to remain mildly bullish for the base metals unless the new US administration starts off creating shock-waves. 

Despite the rebound in the dollar, gold price are holding up well – we think the stronger tone in gold prices in recent weeks is a safe-haven move ahead of the US inauguration. The PGMs, with their industrial and precious metals attributes, seem to be doing even better than gold prices. 

 

Overnight Performance
GMT 07:01 +/- +/- % Lots
Cu 5613 17.5 0.3% 1397
Al 1712.5 -5.5 -0.3% 926
Ni 10360 65 0.6% 1199
Zn 2638 13 0.5% 1140
Pb 2081 11.5 0.6% 171
Sn 20980 -80 -0.4% 1
  Average   0.2%         4,834
Gold 1173.79 0.84 0.1%  
Silver 16.447 -0.008 0.0%  
Platinum 972.4 7.4 0.8%  
Palladium 766.6 12.6 1.7%  
  Average PM   0.6%  

 

SHFE Prices 07:03 GMT RMB Change % Change
Cu 45560 130 0.3%
AL  12555 -35 -0.3%
Zn 21615 240 1.1%
Pb 18005 105 0.6%
Ni 86330 1030 1.2%
Sn 153280 120 0.1%
Average change (base metals) 0   0.5%
Rebar 2966 23 0.8%
Iron ore 571.5 24.5 4.5%
Au 269.7 0.4 0.1%
Ag 4103 -14 -0.3%

 

Economic Agenda
GMT Country Data Actual Expected Previous
7:00am EUR
German Industrial Production m/m
0.4% 0.7% 0.5%
7:00am EUR
German Trade Balance
21.7B 20.8B 20.6B
 8:30am GBP
Halifax HPI m/m
  0.3% 0.2%
9:00am EUR
Italian Monthly Unemployment Rate
  11.6% 11.6%
9:30am EUR
Sentix Investor Confidence
            12.60             10.00
10:00am EUR
Unemployment Rate
  9.8% 9.8%
3:00pm USD
Labor Market Conditions Index m/m
    1.5
8:00pm USD
Consumer Credit m/m
  18.3B 16.0B
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