Metals mixed, copper and aluminium trends weighing on sentiment

Lead was the strongest metal yesterday with gains of 1.5 percent, taking prices to $1,975, tin closed up 0.4 percent and copper closed up 0.2 percent at $4,626.50. The rest were weaker with aluminium off 0.9 percent, zinc off 0.2 percent and nickel off 0.1 percent. The recent weakness in aluminium may well be option related. Precious metals were little changed for the most part, with gold prices closing off 0.1 percent at $1,326.35, the exception was a 0.9 percent rise in platinum to $1,090.

This morning, the base metals remain split with zinc, lead and tin off either side of 0.6 percent, while the rest are up either side of 0.3 percent with copper prices at $4,639. Volume remains average with 5,335 lots traded. Precious metals show little change in gold and silver prices, while platinum is up 0.5 percent and palladium is up 1.5 percent.

In Shanghai, nickel is bucking the trend with a 0.3 percent gain, copper at Rmb 36,540 and lead are little changed, while aluminium, zinc and tin are down around 1.1 percent. Spot copper in Changjiang is off 0.1 percent at Rmb 36,550-36,650, the backwardation with the November contract is at an equivalent of around $16 per tonne, while the LME/Shanghai copper arb ratio at 7.88 means the arb window may be open to some trading, which may start to support LME copper prices.

In other metals in China, iron ore prices are off 0.1 percent, steel rebar is down 0.4 percent, while gold prices are up 0.4 percent and silver is up 1.1 percent. In international markets, Brent crude is stronger at $47.70, which may well be supportive for metals prices.

Equities were quiet yesterday with the US closed, the Euro Stoxx 50 closed off 0.1 percent and Asia is little changed with the Nikkei and Hang Seng up 0.2 percent, the CSI 300 is flat, while the ASX 200 is off 0.4 percent. Markets seem to be waiting for direction from the US after the poor data on Friday and the long weekend.

In FX, the dollar index has recovered from its spike lower following the poor jobs report on Friday, the index is last at 95.80, the euro is weak at 1.1146, sterling is firm at 1.3320, the yen is weak at 103.63, while the aussie is strong at 0.7624. In emerging market currencies, the yuan is slightly firmer at 6.6801 and the rest are flat or slightly firmer, with the rupee looking one of the stronger currencies.

The economic agenda is fairly busy, UK British Retail Consortium saw same-store sales drop 0.9 percent in August, later we get data on German factory orders, EU retail PMI and revised GDP, with US data including ISM non-manufacturing PMI, IBD/TIPP economic optimism and labor market conditions – see table below for more detail.

The base metals seem to be split into various camps, copper prices are under pressure on the back of the stock rises in LME–registered warehouses that have seen average daily stock inflow of 14,700 tonnes since August 19, compared with 3,196 tonnes per day in the first part of August. Aluminium prices are correcting sharply, but its earlier gains were hard to justify, zinc, lead and tin have all been driving higher, but not surprisingly are having to absorb some scale up selling, while nickel is recovering having corrected quite sharply after a very strong June to early August rally. As such, the underlying sentiment seems to remain firm, other than for those metals that are seeing identifiable bearish developments i.e. the stock inflow in copper.

Gold prices continue to consolidate in a sideway-to-lower trend, but dips remain well supported. We see this weakness as a result of the market having to absorb some profit-taking, while it generally remains supportive. The same is true of the other precious metals, albieit they tend to be more volatile.

 

Overnight Performance
BST	05:47	+/-	+/- %	Lots
Cu	4639	12	0.3%	1075
Al	1583	3.5	0.2%	1010
Ni	10065	40	0.4%	374
Zn	2341.5	-16.5	-0.7%	2306
Pb	1959.5	-14.5	-0.7%	519
Sn	19295	-90	-0.5%	51
	Average		-0.2%	5,335
Gold	1326.4	0.05	0.0%
Silver	19.483	0.003	0.0%
Platinum	1075.3	5.3	0.5%
Palladium	684.1	10.1	1.5%
	Average PM		0.5%

 

SHFE Prices 05:48 BST	RMB	Change	% Change
Cu	36540	-10	0.0%
AL	11905	-135	-1.1%
Zn	18220	-220	-1.2%
Pb	14420	-25	-0.2%
Ni	80650	250	0.3%
Sn	127090	-1350	-1.1%
Average change (base metals)	0		-0.5%
Rebar	2429	-9	-0.4%
Au	286.9	1.05	0.4%
Ag	4340	46	1.1%

 

BST	Country	Data	Actual	Expected	Previous
12:01am	UK	BRC Retail Sales Monitor y/y	-0.9%		1.1%
4:45am	Japan	30-y Bond Auction	0.50|3.1		0.42|3.1
7:00am	German	German Factory Orders m/m		0.5%	-0.4%
9:10am	EU	Retail PMI			48.9
10:00am	EU	Revised GDP q/q		0.3%	0.3%
3:00pm	US	ISM Non-Manufacturing PMI		55.4	55.5
3:00pm	US	IBD/TIPP Economic Optimism		48.6	48.4
3:00pm	US	Labor Market Conditions Index m/m			1.0

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