Base metals prices on the London Metal Exchange were mainly firmer on Wednesday March 17, while on the Shanghai Futures Exchange they were weaker across the board.
Broader markets were treading water ahead of this evening’s US Federal Open Market Committee (FOMC) announcements and press conference.
* United States 10-year treasuries yields have firmed again to 1.63%
* EU passenger car registrations are down by 19.3% in February and declined by 21.7% over January and February
Base metals
LME three-month copper prices were upbeat, with prices up by 1.4% at $9,042.50 per tonne. LME nickel (at $16,075 per tonne) was the only metal in negative territory, down by 0.3%. LME tin (at $25,250 per tonne) was not traded, with zinc (at $2,828 per tonne) up by 1.1%, aluminium (at $2,204 per tonne ) up by 0.4% and lead (at $1,942.50 per tonne) up 0.6%.
Base metals prices on the SHFE were all weaker this morning, down by an average of 0.6% and ranged between being down by 0.3% for May tin and 0.8% for May aluminium and June nickel, while May copper was down by 0.7% at 66,970 yuan ($10,371) per tonne.
Precious metals
Precious metals were mixed with spot gold ($1,736.79 per oz) and silver ($25.99 per oz) both up by 0.3% while the platinum group metals were both down by 0.1%.
Wider markets
The yield on US 10-year treasuries firmed again to 1.63% from 1.59% at a similar time on Tuesday. The market is likely to be nervous ahead of today’s FOMC announcements and press conference.
Asian-Pacific equities were mixed on Wednesday: the ASX 200 (-0.47%), the Nikkei (-0.02%), the Kospi (-0.64%), the CSI 300 (+0.41%) and the Hang Seng (-0.08%).
Currencies
The US Dollar Index is firm this morning and was recently at 91.88, around the same level it was on Monday and Tuesday.
Other major currencies were consolidating: the euro (1.1904), the Australian dollar (0.7734), sterling (1.3909) and the yen (109.13).
Key data
Wednesday’s economic data includes EU consumer prices (CPI) and US data on building permits, housing starts, crude oil inventories and then the barrage from the FOMC, including rate decision, statements, projections and press conference.
Today’s key themes and views
The base metals seem to be in holding patterns, with prices consolidating after a year of rallying. The underlying themes with economic recovery, stimulus spending, constrained supply chains and inflation should all be bullish for commodity prices but there are potential headwinds. If the market fears the Federal Reserve is falling behind the curve and bond yields rise further, then there could well be a deeper correction in bonds and a sell-off in equities that would likely affect sentiment in metals for a while.
Gold prices found some support below $1,700 per oz and have got some lift in recent days. We are waiting to see how they react to the output from the FOMC.
William AdamsFastmarkets