Copper price falls below $5,700/t; all base metals down

Financial Markets on Wednesday:

• Fed expected to stand pat on rates
• Jobs data and service sector activity to serve as prelude to Fed
• Apple sales disappoint, shares off 1.5%
• Oil bounces back from 1-month low
• Global stocks show caution ahead of Fed decision

LME on Wednesday:

“Prices have dropped this morning but are consolidating. The rally yesterday failed to inspire a push beyond resistance.” 

All base metals on the London Metal Exchange saw prices decline. Nickel fell by 2.15% while copper fell by 1.88%. Tin and aluminium dropped by smaller margins to hold on to some of Tuesday’s price rally.

3-month copper price plunged by more than $100 per tonne during premarket trading on the London Metal Exchange on May 3. After hitting a three-week high at kerb trading yesterday.

“Underlying sentiment does not seem unified at the moment and the mixed bag of manufacturing PMI data out on Tuesday has raised some doubt over how strong the underlying global economy is.” (Metal Bulletin)

It seems unlikely that consumers will feel the need to chase prices higher. So market would look for more consolidation, although bouts of tightness in the some of the metals could lead to short-covering.

Today is May option declarations day.

Copper falls below $5,700 per tonne

Copper inventories rose 16,225 tonnes to 284,925 tonnes.  After suffering a mild downturn in April, copper is facing more headwinds going into May, according to INTL FCStone.
“The market finds itself in somewhat of a soft spot going into [the second quarter] given that the big events driving values higher last quarter, namely the Escondida and Grasberg outages, are now behind us and the next wave of labour negotiations will not take place until later this year,” Meir said.

“Tightened credit in China during April will continue to put pressure on copper prices,” China’s Galaxy Futures said. (Fast Markets)

Currencies and Indexes 

The dollar index was up 0.15% to 99.07. Following, the Brent crude oil spot price fell 0.45% to 50.87.
Speaking about indexes, The FSTE 100 was down 21.31 (0.29%) to 7,228.73. The final Euro zone manufacturing PMI for April rose to a cycle high of 56.7, while the UK measure hit a three-year high of 57.3. The new orders and export orders indices for both rose strongly. Both of which point to a pick-up in second-quarter growth prospects. (ANZ)

“However, the March unemployment rate for Europe was unchanged at 9.5%, where it has been stuck for three months. Germany may be at a historic low of 3.9%, but France (10.1%), Italy (11.7%) and Spain (18.2%) are not,” the bank added.

 US total vehicles sales data showed sales were running at an annualised rate of 16.9 million units (mu) in April, which was below an expected 17.1 mu, but above March’s 16.6 mu.
Data on Spanish and German unemployment change, UK construction PMI and EU preliminary flash GDP are due later today.  Also due is a series of important US data including ADP non-farm employment change, ISM non-manufacturing PMI, crude oil inventories, a Federal Open Market Committee Statement and the Federal Funds Rate.