London and Shanghai Metal Exchange base metals prices, with the exception of lead, were higher again on the morning of Thursday March 3, building on the gains seen earlier in the week as the markets adjust to the loss of supplies from Russia.
* Spot Brent crude oil trading at more than $118 per barrel
* US Federal Reserve gave more clarity over its interest agenda, focus on inflation
* Western divestment from Russia and boycotting of Russian commodities is threatening supply chains
Base metals
Three-month base metals prices on the London Metal Exchange were generally higher, with nickel, aluminium, zinc and tin setting fresh multi-month highs this morning, while copper and lead have yet to do so. This morning lead prices are down 0.1% at $2,411.50 per tonne, still a relatively high price, while the rest were up by an average of 1.7%, led by a 3.2% rally in nickel ($26,825 per tonne) and a 2.1% rise in zinc ($3,972 per tonne). Copper was up by 0.9% at $10,345 per tonne).
The most-traded contracts on the Shanghai Futures Exchange were mainly higher, April lead bucked the trend with a 0.9% fall, while the rest were up by an average of 2.1%, led by a 3.6% rise in April aluminium, with April copper up by 1.7% at 72,720 yuan ($11,508) per tonne.
Precious metals
Spot gold prices were consolidating this morning with prices off by 0.1% at $1,927.90 per oz, still below the initial spike to $1,973.75 per that followed Russia’s invasion of Ukraine. The other more industrial precious metals were up by an average of 0.9%, led by the platinum group metals.
Wider markets
In line with a consolidating gold price, demand for havens seems to be calming down, as seen with the pick-up in United States 10-year treasury yields to 1.85%, from 1.73% at a similar time on Wednesday.
Asia-Pacific equities were also suggesting some risk-on on Thursday: the Hang Seng (+0.5%), the Nikkei (+0.7%), the Kospi (+1.61%) and the ASX 200 (+0.49%), with China’s CSI 300 (-0.62%) bucking the trend.
Currencies
The US Dollar Index is consolidating in high ground and was recently at 97.45, compared with 97.58 at a similar time on Wednesday.
The other major currencies were mixed: the euro (1.1104) and the Japanese yen (115.68) were consolidating in low ground, while sterling (1.3416) and the Australian dollar (0.7316) were stronger. Again, the weaker yen suggests less demand for havens.
Key data
Economic data out already on Thursday showed China’s Caixin services purchasing managers index (PMI) drop to 50.2 in February, from 51.4 in January, and Japan’s consumer confidence index in February was 35.3, after 36.7 in January.
There is a mass of data still to be released today, with services PMI statistics out across Europe and the US, along with Italian and EU data on monthly unemployment rates, EU producer prices (PPI), with US data on Challenger job cuts, initial jobless claims, revised non-farm productivity, revised unit labor costs, factory orders and natural gas storage.
US President Joe Biden is scheduled to testify on the Semi-Annual Monetary Policy Report before the Senate Banking Committee and US Federal Open Market Committee member John Williams is scheduled to speak.
Thursday’s key themes and views
With Russian commodity supplies set to be massively disrupted as companies decide for themselves whether to avoid trading with Russia, despite the sanctions generally not affecting commodities, consumers and traders are having to cover the potential shortages, giving them little option other than to chase prices higher.
With other commodity prices rising aggressively, the inflow into havens seems to have slowed - although it may well pick-up again as industrial commodity prices get even more expensive and as inflationary pressures mount.