METALS MORNING VIEW 20/03: Base metals prices start to edge higher after weaker start

Base metals prices are down across the board this morning, Monday March 20, with prices off an average of 0.7%, led by a 1% drop in three-month nickel prices to $10,170 per tonne, while copper prices are off 0.7% at $5,892 per tonne.

These losses come after gains averaging 1.4% on Friday March 17. Volume this morning has been average with 6,319 lots traded as of 06:45 GMT.

Precious metals prices are up an average of 0.3% this morning, with spot gold prices up 0.4% at $1,234.16 per oz, this after gains averaging 0.8% on Friday.

In Shanghai, the base metals are for the most part little changed, the exceptions are nickel where prices are up 1.7% and lead, which is up 0.5%. Copper prices are little changed at 47,950 yuan per tonne. Spot copper prices in Changjiang are up 0.3% at 47,650-47,850 yuan per tonne and the LME/Shanghai copper arb ratio is at 8.14, meaning the arb window remains closed.

In other metals in China, May iron ore future prices are off 0.4% on the Dalian Commodity Exchange and on the Shanghai Futures Exchange, steel rebar prices are off 0.6%, while gold and silver prices are up 0.4%. In international markets, spot Brent crude oil prices are down 0.4% at $51.53 per barrel and the yield on US 10-year treasuries are around 2.49%.

Equities ended last week on a mixed footing with the Euro Stoxx 50 up 0.3%, while the Dow closed down 0.1%. While in Asia this morning equities are also mixed with the Hang Seng up 0.6%, the CSI 300 is little changed, the Kospi and the ASX200 are down 0.4%. Japan is closed for a holiday.

In FX, the dollar index continues to retreat as it has been doing since last week’s US Federal Open Market Committee (FOMC) decision to raise interest rates. The index was recently quoted at 100.11. Conversely, major currencies are firmer with the euro at 1.0769, the sterling at 1.2408, the yen at 112.64 and the Australian dollar at 0.7728. The yuan is firmer at 6.8888 and the other emerging market currencies we follow are firmer too, especially the rand at 12.6572.

On the economic data front, German PPI came out at 0.2%, which is weaker than of late, later the Bundesbank releases its monthly report and Bundesbank president Jens Weidmann is speaking, as are FOMC member Charles Evans, UK Monetary Policy Committee member Andrew Haldane and US president Donald Trump – see table below for more details.

Base metals prices seem to be consolidating this morning after a generally stronger tone last week. The underlying bias seems to be to the upside but overhead selling is likely to continue to cap the upside, as such, we expect more range-trading.

With the US interest rate rise now out of the way, gold prices are managing to float higher again and the weaker dollar will be helping with that. The next focal point for gold is likely to be the French presidential election, but that is still over a month away with the first round on April 23. As such, we would look for gold prices to range trade.

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


March 20, 2017

08:42 GMT