Base metals prices were mixed on both the LME and the SHFE this morning, Monday September 13. But while the mood in broader markets remains somewhat negative, the base metals seem to be entering the post-summer period in a more bullish mood.
There is a barrage of key Chinese economic data out this week, which the market is likely to watch closely for signs that the Chinese economy is slowing.
Base metals
Three-month base metals prices on the London Metal Exchange were mainly weaker on Monday. Nickel led the decline with a 1.3% drop to $20,125 per tonne, followed by a 0.8% fall in zinc to $3,082.50 per tonne, while aluminium bucked the trend with a 1.3% rise to $2,965 per tonne. Copper was down by 0.1% at $9,682 per tonne.
Despite the overall weaker performance this morning, on the charts most of the metals started to look stronger last week, suggesting they were leaving the summer lull on a bullish note.
The most-active base metals contracts on the Shanghai Futures Exchange were mainly stronger this morning, with the complex up by an average of 1.4% as they reacted to the strong performance on the LME on Friday when the complex closed with gains averaging 1.6%. This morning the October contracts for aluminium, copper and tin led on the upside with gains of 4.2% for aluminium, 2.5% for copper and 1.4% for tin. Copper closed at 71,460 yuan ($11,085) per tonne, while zinc was up by 0.2%, nickel down 0.2% and lead virtually unchanged.
Precious metals
Precious metals were up across the board, with spot gold up by 0.3% at $1,792.85 per oz, spot silver up 0.2% at $23.76 per oz and the platinum group metals up by around 0.7%.
Wider markets
The yield on US 10-year treasuries has edged higher again and was recently at 1.33%, compared with 1.31% at a similar time on Friday.
Asia-Pacific equities were mainly weaker this morning: the Nikkei (-0.16%), the Hang Seng (-2.36%) and the CSI 300 (-0.79%) were down, while the Kospi (+0.0.09%) and the ASX 200 (+0.09%) were up slightly.
Currencies
The US Dollar Index is trying higher on Monday morning and was most recently at 92.75 - up from 92.49 at a similar time on Friday.
The other major currencies were either consolidating, in the case of sterling (1.3823) and the Japanese yen (110.04), or slightly weaker, the euro (1.1794) and the Australian dollar (0.7348).
Key data
Economic data already out on Monday included Japan’s producer prices index (PPI) which climbed by 5.5% in August, edging down from a 5.6% rise in July.
Later on today there is data on German wholesale prices, the Italian unemployment rate and the United States Federal budget balance.
Monday’s key themes and views
Despite the weaker opening on the LME this morning, most of the metals seemed to step up a gear last week and are looking more bullish again, led by aluminium, nickel and zinc, with copper and tin rebounding, while lead remained rangebound. For now, though, it looks as though the end of the summer period is prompting some restocking.
Gold seems stuck between resistance around the $1,834-per-oz level and support at around $1,783 per oz. Generally strong equity and commodity markets mean the opportunity cost of holding gold is high. The prospect of higher interest rates as and when central banks start to taper, or try to suppress inflation, may also be a headwind for gold, unless broader markets get jittery, thereby increasing the need for havens.