The three-month base metals prices traded on the London Metal Exchange were mixed and little changed on the morning of Tuesday February 19.Zinc led the decline with a 0.3% drop to $2,635 per tonne from $2,643.50 per tonne at Monday’s close, followed by nickel that was down by 0.2% at $12,440 per tonne from $12,465 per tonne, while aluminium was up by 0.2% at $1,858 per tonne from $1,854 per tonne. The rest of the complex was little changed with copper off by $3 per tonne at $6,258 per tonne, after closing at $6,261 per tonne on Monday.
Volume across the complex has been below average with 4,403 lots traded as at 7:05am London time. This compares with 9,654 lots traded at a similar time on Monday.
Spot bullion prices were slightly weaker this morning with gold off by 0.1% at $1,324.79 per oz, compared with a previous close of $1,326.30 per oz, while silver was down by 0.2% at $15.76 per oz, from $15.80 per oz. The platinum group metals (PGMs) were stronger however, with palladium up by 1.7% at $1,480.10 per oz, compared with $1,456 per oz at Monday’s close, while platinum was up by 0.6% at $809.20 per oz, from its previous close of $804 per oz.
In China, base metals prices on the Shanghai Futures Exchange were mixed with gains averaging 1.1% across the April copper, May nickel and May tin contracts, while the March lead contract was down by 1% and the March aluminium and zinc contracts were off by 0.2% and 0.3% respectively. The April copper contract was recently quoted at 49,360 yuan ($7,292) per tonne, up from 48,810 yuan per tonne previously. The spot copper price in Changjiang was up by 1.1% at 48,790-49,060 yuan per tonne, compared with 48,250-48,530 yuan per tonne on Monday, and the London/Shanghai copper arbitrage ratio was at 7.89.
In other metals in China, the May iron ore contract on the Dalian Commodity Exchange was unchanged at 631 yuan per tonne. On the SHFE, the May steel rebar contract was up by 0.3% at 3,656 yuan per tonne, compared with 3,645 yuan per tonne.
In wider markets, the spot Brent crude oil price was up by 0.09% at $66.52 per barrel from $66.37 per barrel – prices have formed and triggered a very clear inverse head-and-shoulder pattern on the chart.
The yield on US 10-year treasuries was recently quoted at 2.6654%. The yields on the US 2-year and 5-year treasuries remain inverted and were recently quoted at 2.5130% and 2.4918% respectively. The German 10-year bund yield was recently quoted at 0.1050%.
Asian equity markets were mixed on Tuesday: Nikkei (+0.1%), Hang Seng (-0.39%), the CSI 300 (-0.18%), the ASX 200 (+0.28%) and the Kospi (-0.24%).This follows a slightly stronger performance in western markets on Monday; in the United States, the Dow Jones Industrial Average was closed for Presidents’ Day, but in Europe, the Euro Stoxx 50 closed up by 0.11% at 3,244.79.
The dollar index’s latest run higher stalled ahead of resistance at 97.70, it peaked at 97.37 on February 15 and was recently quoted at 96.85. The consolidation in the dollar has led to consolidation amongst the other major currencies we follow: the euro (1.1304), the yen (110.65), the Australian dollar (0.7117) and sterling (1.2921).The yuan has been trading sideways and was recently quoted at 6.7654 and most of the other emerging market currencies we follow are either on a slight backward footing or are consolidating.
On the economic agenda for Tuesday, there is data on the European Union’s current account, German and EU Zentrum fur Europaische Wirtschaftsforschung (ZEW) economic sentiment, UK employment and the US National Association of Home Builders (NAHB) housing market index.
Most of the base metals are consolidating after recent pullbacks from earlier strength, the exceptions are tin that is clearly in a strong uptrend and copper which is rebounding to once again challenge resistance that lies between $6,290 per tonne and $6,394 per tonne. Clearance could signal prices are breaking up out of a large base. On balance, with the global economy showing signs of slowing down the climate is not overly bullish, although a trade deal could change that and if industry has destocked over recent quarters then any pick-up in optimism could lead to restocking.
With the exception of platinum, the precious metals are trending higher, which in the case of gold suggests investors are increasing their exposure to gold in these uncertain times.
William AdamsFastmarkets