By William Adams / January 03, 2018 / www.metalbulletin.com /
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Base metals traded on the London Metal Exchange are for the most part weaker on Wednesday January 3, led by a 1% fall in nickel prices to $12,530 per tonne. The rest are off between 0.4% for copperand 0.8% for aluminium, while tin is bucking the trend with a 0.5% rise.
Volume has been light, with 5,367 lots traded as of 06:35 am London time.
This comes after a mixed performance on Tuesday that saw lead prices rise 2.4%, zinc prices rise 0.9%, and nickel prices edge 0.1% higher, while copper, aluminium and tin prices were off between 0.5% and 0.8%.
The strong run higher in spot gold (-0.4% at $1,314.76), silver (-0.7%) and platinum (-0.1%) prices has halted for now, while palladium prices remain robust and holding on to yesterday's gains. This follows a strong day across the precious metals complex on Tuesday that saw prices up by an average of 1.9%, with palladium prices up 2.9%. A rebound in the dollar seems to have provided the headwinds for gold.
On the Shanghai Futures Exchange today, the base metals complex is mixed - lead is the main gainer with a +1.8% rise, zinc prices are up 0.1% and nickel is little changed, while the rest are weaker tin (-0.7%), aluminium (-0.6%) and copper prices are off 0.4% at 54,910 yuan ($8,439) per tonne. Spot copper prices in Changjiang are down by 0.1% at 54,560-54,710 yuan per tonne and the LME/Shanghai copper arbitrage ratio stands at 7.64.
In other metals in China, iron ore prices are down by 0.4% at 538 yuan per tonne on the Dalian Commodity Exchange. On the SHFE, steel rebar prices are up by 0.1%, gold prices are up by 0.5% and silver prices are up by 0.2%.
In wider markets, spot Brent crude oil prices are 0.12% higher at $66.56 per barrel, the yield on US 10-year treasuries is firmer at 2.46%, and the German 10-year bund yield is at 0.46%.
Equities are firmer today, with the Shanghai CSI 300 up by 0.78%, the Kospi up by 0.27%, the ASX 200 up by 0.15% and the Hang Seng up by 0.04%. The Nikkei remains closed. This follows a mixed performance in western markets on Tuesday, where in the United States the Dow Jones closed up by 0.42% at 24,824.01 and in Europe the Euro Stoxx 50 closed down by 0.39% at 3,490.19.
The dollar index, at 91.89, is consolidating after yesterday's dip to 91.75. Having broken support at 92.50 on Friday December 29, it suggests the index is now going to test the September 2017 low at 91.01. That said, with US treasury yields on the rise the dollar may not stay down for long. Given the overall downward momentum in the dollar, most of the currencies are stronger: euro (1.2043), sterling (1.3596), the Australian dollar (0.7817) and the yen (112.30). The yuan at 6.5100 is giving back some of its gains of yesterday when it traded at 6.4897.
The economic calendar contains data on Spanish and German unemployment change, UK construction PMI, US ISM manufacturing PMI and manufacturing prices, US construction spending, total vehicle sales and the Federal Open Market Committee (FOMC) meeting minutes.
Some profit-taking and scale-up selling has entered the base metals arena - this after the very strong gains seen in the second half of December. The exception is lead where prices have been climbing, but lead prices had not joined in to the December rally to the extent of the other metals. As we warned yesterday, there is a danger that prices run ahead of the fundamentals, which this pullback suggests may have been the case. But with the longer-term outlook positive the bull run may continue after this bout of consolidation, as traders anticipate stronger fundamentals down the road. We remain quietly bullish.
In line with the base metals, gold, silver and platinum prices are giving back some of their recent gains, but for now the pullback has been limited. We should get a feel for how bullish underlying sentiment is by seeing how far the pullbacks go. It maybe some nervousness has entered the market ahead of this evening's FOMC minutes. Palladium's rally continues, backed by fundamentals - prices have been as high as $1,098.50 per oz, not far off the high in January 2001 of $1,110 per oz.
| Overnight Performance |
| GMT | 06:25 | +/- | +/- % | Lots |
| Cu | 7,188 | -29.0 | -0.4% | 1,490 |
| Al | 2,247 | -18.0 | -0.8% | 1,532 |
| Ni | 12,530 | -125.0 | -1.0% | 1,133 |
| Zn | 3,328 | -19.0 | -0.6% | 926 |
| Pb | 2,546 | -12.5 | -0.5% | 268 |
| Sn | 19,930 | 95.0 | 0.5% | 18 |
| | Average | | -0.5% | 5,367 |
| Gold | 1,314.76 | -5.34 | -0.4% | |
| Silver | 17.07 | -0.12 | -0.7% | |
| Platinum | 942.00 | -1.00 | -0.1% | |
| Palladium | 1,092.30 | 0.30 | 0.0% | |
| | Average PM | | -0.3% | |
| SHFE Prices 06:25 GMT | RMB | Change | % Change |
| Cu | 54,910 | - 230 | -0.4% |
| AL | 15,080 | - 85 | -0.6% |
| Zn | 25,875 | 20 | 0.1% |
| Pb | 19,345 | 340 | 1.8% |
| Ni | 98,760 | 10 | 0.0% |
| Sn | 144,900 | - 1,010 | -0.7% |
| Average change (base metals) | | | 0.0% |
| Rebar | 3,846.00 | 4.00 | 0.1% |
| Au | 280.60 | 1.40 | 0.5% |
| Ag | 3,907.00 | 7.00 | 0.2% |
| Iron Ore (DCE) May'18 | 538 | -2 | -0.4% |
| Economic Calendar |
| GMT | Country | Data | Actual | Expected | Previous |
| All Day | Japan | Bank Holiday | | | |
| 8:00am | Spanish | Spanish Unemployment Change | | -58.7K | 7.3K |
| 8:55am | Germany | German Unemployment Change | | -13K | -18K |
| 9:30am | UK | Construction PMI | | 52.8 | 53.1 |
| 3:00pm | US | ISM Manufacturing PMI | | 58.1 | 58.2 |
| 3:00pm | US | Construction Spending m/m | | 0.6% | 1.4% |
| 3:00pm | US | ISM Manufacturing Prices | | 64.8 | 65.5 |
| All Day | US | Total Vehicle Sales | | 17.5M | 17.5M |
| 7:00pm | US | FOMC Meeting Minutes | | | |