METALS MORNING VIEW 03/08: No let up in downward pressure in metals prices

Three-month base metals prices on the London Metal Exchange were for the most part weaker on the morning of Friday August 3, with the complex down by an average of 0.2%.

Aluminium and nickel prices were unchanged to slightly higher, while lead prices led on the downside with a 0.6% fall and copper prices were off by 0.3% at $6,124 per tonne.

This follows a mixed day on Thursday, when aluminium, nickel and tin prices closed down, while copper, zinc and led prices rose.

Volume has been light, with 4,800 lots traded as at 06.47am London time.

Gold and silver prices were both off by 0.1%, while the platinum group metals were up by 0.3%. Spot gold prices recently traded at $1,207.85 per oz – this after a down day on Thursday when gold prices dropped 0.6%.

In China, base metals prices on the Shanghai Futures Exchange were mixed with copper, aluminium and zinc prices up by an average of 0.4%, while lead, nickel and tin prices were down by an average of 1.1%. The most-actively traded September copper contract was up by 0.2% at 49,330 yuan ($7,218) per tonne.

Spot copper prices in Changjiang were up by 0.2% at 49,190-49,320 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 8.06 after 7.97 on Thursday.

In other metals in China, the September iron ore contract on the Dalian Commodity Exchange was up by 2.1% at 483.50 yuan per tonne. On the SHFE, the October steel rebar contract was up by 1.2%, while the December gold and silver contracts were off by 0.2%.

In wider markets, spot Brent crude oil prices were up by 0.17% at $73.25 per barrel this morning. The yield on US 10-year treasuries was weaker at 2.9847%, while the German 10-year bund yield was similarly weaker at 0.4470%.

Asian equity markets were for the most part weaker again on Friday: Nikkei (-0.02%), Hang Seng (-0.10%), CSI 300 (-0.92%), ASX200 (-0.10%), while the Kospi climbed 0.77%. This follows a weaker performance in western markets on Thursday; in the United States, the Dow Jones closed down by 0.03% at 25,326.16, while in Europe the Euro Stoxx 50 closed down by 1.14% at 3,469.21.

The dollar index climbed on Thursday and was pushing higher again this morning, it was recently quoted at 95.18, but is still within its recent 93.71-95.66 range. On the chart, it looks like the dollar is building the right shoulder of a large inverse head-and-shoulder pattern, which is a bullish formation. Thursday’s strength in the dollar is the reason behind gold’s weaker tone this morning.

With the dollar stronger, most of the other major currencies we follow are weaker: sterling (1.3013), the euro (1.1582), the Australian dollar (0.7362), while the yen is consolidating at 111.67.

The yuan has weakened further and was recently quoted at 6.8734 – the low last December was 6.9633. The other emerging market currencies we follow are also looking weaker this morning, with the Asian currencies in low ground, while the real and peso are consolidating at levels further away from recent lows.

The economic agenda is busy again today, with China’s Caixin services purchasing managers’ index (PMI) falling to 52.8 from 53.9. Later, we have France’s government budget balance, services PMI data from Spain, Germany, Italy, France, United Kingdom, European Union and the US. Other data of note includes Italian industrial production, Italian and EU retail sales as well as the US employment report and trade balance.

Base metals prices had pushed off recent lows in late July, but prices are under pressure again after continuing and escalating trade war rhetoric has zapped traders and business confidence. Even strikes in South America have failed to lift copper prices.

The precious metals have also been negatively affected by the same factor hitting the base metals, especially with the dollar strengthening again. If broader markets start to follow the metals’ lead, then there may be a pick-up in demand for safe havens and at these prices levels, gold may look a well-priced safe haven. Fund short positions are large, so short-covering could become a bullish factor before too long, especially if the US Federal Reserve were to become less hawkish as a result of the likely contagion from a trade war.

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Gold Explorer to Launch Six-Project Drill Campaign in Nevada

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Diamond Miner Begins 2018 Drill Program at North Kimberley Diamond Project

Drill program begins in Western Australia.

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Metal Bulletin parent company expands commodity price reporting ops with purchase of lumber pricing business

Leading lumber and wood products price reporting agency (PRA) Random Lengths will become part of Euromoney’s commodity price reporting division, which includes the Metal Bulletin operations. Euromoney Institutional Investor plc agreed to buy the US-based company on Wednesday August 1.

Founded in 1944 and located in Eugene, Oregon, Random Lengths provides independent price assessments and market reporting for the global wood products industry. It has a core focus on the North American lumber and panels markets, publishing more than 1,500 prices each week.

Together with RISI, a PRA for the global forest product industry that was acquired by Euromoney in April 2017, it will form the primary global source for pricing data and intelligence for the markets it serves.

Euromoney’s commodity price reporting division is headed by Raju Daswani, who is also the Metal Bulletin chief executive officer.

The Metal Bulletin group aims to provide leading pricing intelligence, including independent industry benchmarks, for the metal and mining industry. The group’s global portfolio of news, analysis, conferences and insight services complement these price benchmarks.

“We are delighted to have added Random Lengths to our group. It complements our existing forest products business and will enhance our ability to serve these markets with the products it needs,” Daswani said.

“In recent years, we have invested considerably in Metal Bulletin’s pricing technology and systems so that we can provide the best channels of delivery for our data into our client workflows but also increasing the transparency of our prices,” he added. “The investment we have made will now be available to our new business, which in turn will help us improve the service for clients of Random Lengths.”

Combined with existing pricing activities, the addition of Random Lengths will enhance Euromoney’s position as a global and world-class cross-commodity PRA, with more than 380 employees and over 5,500 reference prices & benchmarks.

The acquisition of Random Lengths this week and RISI in April 2017 follows the acquisition in August 2016 of FastMarkets, a leading provider of real-time physical base metals and exchange pricing information, which significantly enhanced Metal Bulletin’s position in price reporting.

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METALS MORNING VIEW 02/08: Metals prices attempt to rebound following Wednesday’s weakness

Three-month base metals prices on the London Metal Exchange were up across the board by an average of 0.7% on the morning of Thursday August 2.

Zinc led the gains with a 1.3% increase to $2,572 per tonne, while copper was up by 0.7% at $6,168 per tonne.

This follows a downbeat day on Wednesday when the complex closed with losses averaging 2.7%, led by a 4.8% drop in nickel and 3.6% fall in zinc. The weaker tone was due to heightened trade concerns in the market after US President Donald Trump threatened to raise tariffs against China.

Volume has been high this morning, with 10,870 lots traded as at 07.51am London time – high volume and across-the-board gains in prices bodes well for the complex, but sentiment is likely to remain fragile while trade wars rage on.

Precious metals were broadly stronger this morning; platinum rose by 0.6%, palladium and gold were up by 0.2% –with the latter at $1,218.90 per oz, while silver was unchanged. But, this follows weakness on Wednesday, when gold and silver prices fell by around 0.5%, while the platinum group metals fell by an average of 1.7%.

In China, base metals prices on the Shanghai Futures Exchange followed Wednesday’s weaker performance on the LME, with prices down an average of 1.4% this morning. The most-actively traded September copper contract down by 1.6% at 49,140 yuan ($7,210) per tonne.

Spot copper prices in Changjiang were down by 1.5% at 49,070-49,250 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 7.97.

In other metals in China, the September iron ore contract on the Dalian Commodity Exchange was down by 0.8% at 476.50 yuan per tonne. On the SHFE, the October steel rebar contract was down by 1.5%, while the December gold and silver contracts were off by 0.1% and 0.3% respectively.

In wider markets, spot Brent crude oil prices were up by 0.02% at $72.59 per barrel this morning. The yield on US 10-year treasuries was firmer at 2.9905%, while the German 10-year bund yield was also firmer at 0.4750%.

Asian equity markets were weaker on Thursday with markets reacting to Trump’s latest tariff threats: Nikkei (-1.03%), Kospi (-1.60%), Hang Seng (-2.31%), CSI 300 (-2.22%) and ASX200 (-0.56%). This follows a weaker performance in western markets on Wednesday; in the US, the Dow Jones closed down by 0.32% at 25,333.82, while in Europe the Euro Stoxx 50 closed down by 0.66% at 3,486.15.

Poor US total vehicle sales for July that fell to 16.8 million units, annualized, from 17.5 million units and weaker than expected US purchasing managers’ index (PMI) data, are also weighing on sentiment. That said, the US Federal Open Market Committee remains upbeat about the US economy.

The dollar index, at 94.86, is firmer within its recent 93.71-95.66 range. On the chart, it looks like the dollar is building the right shoulder of a large inverse head-and-shoulder formation.

Most of the other major currencies we follow are consolidating with a slightly weaker bias; sterling (1.3080), the euro (1.1632), the Australian dollar (0.7378), while the yen is firmer at 111.63.

The yuan remains on a back footing and was recently quoted at 6.8199. The other emerging market currencies we follow are also looking weaker this morning.

The economic agenda is busy again today, with data out already showing Japan’s monetary base climbed 7% and Spanish unemployment change fell 27,100.

European data out later includes UK construction producer price index (PPI), EU PPI and the Bank of England’s interest rate decision – the bank is expected to raise rates by 25 basis points and will be updating its latest monetary policy decisions. US releases include Challenger job cuts, initial jobless claims, factory orders and natural gas storage.

Base metals prices had pushed off recent lows but failed to attract follow-through buying and Wednesday’s weakness suggests that, at best, prices are still base building and they could test support again. Continuing and escalating trade war rhetoric is zapping traders and business and in this climate it is difficult to see buyers return with confidence. That said, if bases are established then there will be potential for short-covering. Meanwhile for copper, prices could rally if Escondida workers vote for a strike.

In the precious metals, gold prices are holding in low ground, while silver and platinum prices are giving back more of their recent gains. Meanwhile, palladium prices are weaker but are still well above recent lows. Fund short positions are large, so short-covering could become a bullish factor before too long, especially if the US Federal Reserve were to become less hawkish as a result of the likely contagion from a trade war.

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METALS MORNING VIEW 01/08: Metals prices retreat again after Chinese manufacturing PMI disappoints

Three-month base metals prices on the London Metal Exchange were down across the board by an average of 1% on the morning of Wednesday August 1. Zinc led the decline with a 1.7% drop to $2,590 per tonne, while copper was down by 1.2% at $6,244 per tonne.

The disappointing release of China’s Caixin manufacturing purchasing manager’s index (PMI) for July – easing to 50.8 from 51 and below the expected 50.9 – has dampened sentiment, although a stronger manufacturing PMI in Japan that climbed to 52.3 from 51.6 was encouraging.

This follows a day of strength on Tuesday when the complex closed up by an average of 1%, led by a 3.4% rebound in zinc prices.

Volume has been above average with 7,807 lots traded across the complex as at 6.51am London time.

Precious metals were split with spot gold and silver prices off between 0.2% and 0.3%, with gold prices at $1,220.25 per oz, while the platinum group metals (PGMs) were up between 0.1% and 0.2%. This follows a day of strength on Tuesday when the complex closed up by an average of 0.3%.

In China, base metals prices on the Shanghai Futures Exchange were mixed, but with more of an upside bias. Lead and tin prices led on the downside with drops of 0.6% and 0.5% respectively, while the rest were up by an average of 0.6% – led by a 1.2% rebound in zinc prices. The most-actively traded September copper contract was up by 0.2% to 49,500 yuan ($7,256) per tonne.

Spot copper prices in Changjiang were up by 0.4% at 49,850-49,960 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 7.99.

In other metals in China, the September iron ore contract on the Dalian Commodity Exchange was down by 2.6% at 475 yuan per tonne. On the SHFE, the October steel rebar contract was up by 0.5%, while the December gold and silver contracts were both down by 0.1%.

In wider markets, spot Brent crude oil prices were down by 0.25% at $73.98 per barrel this morning. The yield on US 10-year treasuries was firmer at 2.9752%, while the German 10-year bund yield was also firmer at 0.4600%.

Asian equity markets were mixed on Wednesday: Nikkei (+0.84%), Kospi (+0.52%), Hang Seng (-0.22%), CSI 300 (-0.74%) and ASX200 (-0.09%). This follows a stronger performance in western markets on Tuesday; in the United States, the Dow Jones closed up by 0.43% at 25,415.19, while in Europe the Euro Stoxx 50 closed up by 0.38% at 3,525.49.

The dollar index, at 94.66, is firmer within its recent 93.71-95.66 range. On the chart, it looks like the dollar is building the right shoulder of a large inverse head-and-shoulder formation.

Most of the other major currencies we follow are consolidating; sterling (1.3104), the euro (1.1681), the Australian dollar (0.7408), while the yen is weaker at 112.076. The fact that the other major currencies are consolidating is not surprising given this is a heavy week for central bank decisions with the US Federal Reserve and the Bank of England setting policy this week, along with a barrage of other economic data being released.

The yuan remains on a back footing and was recently quoted at 6.8210. The other emerging market currencies we follow are also looking weaker this morning.

The economic agenda is very busy today. On top of data that has already been released, there is PMI data out across Europe and the US, as well as US ADP non-farm employment change, construction spending, crude oil inventories, total vehicle sales and the Federal Open Market Committee’s (FOMC) rate decision and statement.

The base metals prices have lifted off recent lows but for now seem in no hurry to extend rebounds given all the uncertainty over global trade. This may change if the data out over the rest of the week starts to show a pick-up in activity. Meanwhile for copper, prices could rally if Escondida workers vote for a strike.

In the precious metals, gold and silver prices holding in low ground, while the PGMs are following the lead of the base metals and have got some lift off of the lows, but also seem in no hurry to extend gains.

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Initial Drilling Finds Continuity of Gold Mineralization at Mexico Project

The first drilling that an exploration company has conducted on a project located in a historical mining district has demonstrated gold continuity.

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