METALS MORNING VIEW 27/02: Metals prices consolidate after Friday's rebound

The base metals are for the most part on a back footing this morning, Monday February 27, with prices off an average of 0.2% - nickel and tin are the two metals bucking the trend with tin prices rising 0.8% and nickel prices up 0.4%, while the rest are weaker.

Zinc prices lead on the downside with a 1% fall, lead prices are off 0.9%, copper prices are down 0.4% at $5,891 per tonne and aluminium prices are off 0.2%. Volume on the London Metal Exchange has been light with 5,754 lots traded as of 07:14 GMT. This generally weaker tone comes after a day of rebound on Friday, when the base metals closed up with average gains of 1.6%.

The precious metals are little changed-to-firmer this morning, spot gold prices are down 0.1% at $1,256.96 per oz, silver prices are up 0.1% while platinum and palladium prices are up 0.2% and 0.3%, respectively. This follows a stronger day on Friday, when prices closed up an average of 0.8%, led by a 1.8% rise in platinum prices.

In Shanghai this morning, the Shanghai Futures Exchange complex is split, nickel and tin are up strongly with gains of 2.6% and 1.5%, respectively, while the rest are lower with 0.1% losses in copper (47,690 yuan per tonne) and aluminium, zinc is down 0.2% and lead is off 0.6%.

Spot copper in Changjiang is up 1.2% at 47,700-47,900 yuan per tonne – the disparity between spot and the futures highlights that copper prices opened on a stronger note this morning, but have since weakened, while the LME/Shanghai copper arb ratio is at 8.09.

In other metals in China, May iron ore prices on the Dalian Commodity Exchange have rebounded with gains of 3.2%, on the SHFE, steel rebar is up 4.1%, silver prices are up 1.5% and gold prices are up 0.8%. In international markets, Brent crude oil prices are up 0.9% at $56.44 per barrel, while German 2-year bond yields have fallen to fresh lows.

Equities on Friday saw the Euro Stoxx 50 close down 0.9%, while the Dow closed up 0.1%, but Asia is negative this morning with the Nikkei off 0.9%, the Hang Seng is off 0.2%, the CSI 300 is off 0.8%, the ASX200 is off 0.3% and the Kospi is off 0.4%.

In FX, the dollar index attempted to rebound on Friday but early follow-through strength this morning is waning, the dollar index was recently quoted at 101.10. The euro is consolidating at 1.0575, as is the Australian dollar at 0.7690, the yen is firmer at 112.23, while the sterling is weaker at 1.2420 as there are fears that the Scottish government may call another independence referendum. In emerging market currencies, the yuan is weaker at 6.8734 and across the other currencies we follow, most are consolidating having shown some strength in recent days.

On the economic agenda there is data on Spanish CPI, EU M3 money supply and private loans, while US data includes durable goods orders, pending home sales and US Federal Open Market Committee member Robert Kaplan is speaking. In Japan, later this evening there is data out on preliminary industrial production and retail sales – see table below for more details.

The base metals have shown some hesitation in their ability to extend gains in recent weeks, but as was seen at the end of last week, price dips did attract buying so the key will now be whether there is follow-through buying. With US president Donald Trump speaking to the US Congress on Tuesday the market is bracing for further details on his plans on tax reforms, which could set the next direction for sentiment and therefore prices. Also later in the week, there will be the Chinese manufacturing PMI. So in the short term we would look for more consolidation, perhaps with a weaker bias, although nickel and tin may trade their own fundamentals more.

Gold prices did extend higher last week which shows a robust uptrend and suggests investors are still diversifying their portfolios to build up their haven holdings. With US president Donald Trump and Fed Chair Janet Yellen speaking this week, price action could become choppy.

Metal Bulletin publishes live futures reports throughout the day, covering major metals exchanges news and prices.

Overnight Performance
GMT 07:14 +/- +/- % Lots
Cu 5891 -23 -0.4% 1989
Al 1881 -4 -0.2% 876
Ni 10930 45 0.4% 1149
Zn 2802 -28 -1.0% 1280
Pb 2240 -19.5 -0.9% 440
Sn 19300 145 0.8% 20
  Average -0.2%        5,754
Gold 1256.96 -0.69 -0.1%  
Silver 18.35 0.01 0.1%  
Platinum 1027.5 2.5 0.2%  
Palladium 771.4 2.4 0.3%  
  Average PM 0.1%  

SHFE Prices 07:14 GMT RMB Change % Change
Cu 47690 -70 -0.1%
AL  13725 -15 -0.1%
Zn 22730 -45 -0.2%
Pb 18545 -115 -0.6%
Ni 90700 2280 2.6%
Sn 147240 2200 1.5%
Average change (base metals)   0.5%
Rebar 3590 141 4.1%
Iron ore 714 22 3.2%
Au 282.1 2.1 0.8%
Ag 4319 62 1.5%

Economic Agenda
GMT Country Data Actual Expected Previous
8:00am Spain Spanish Flash CPI y/y 3.0% 3.3% 3.0%
9:00am EU  M3 Money Supply y/y 4.9% 5.0%
9:00am EU  Private Loans y/y 2.1% 2.0%
1:30pm US  Core Durable Goods Orders m/m 0.5% 0.5%
1:30pm US  Durable Goods Orders m/m 1.6% -0.5%
3:00pm US  Pending Home Sales m/m 1.1% 1.6%
4:00pm US  FOMC Member Kaplan Speaks  
11:50pm Japan Prelim Industrial Production m/m 0.4% 0.7%
11:50pm Japan Retail Sales y/y   1.0% 0.7%


February 27, 2017

08:42 GMT