May the 25th: OPEC is definitely extending Oil output cuts (forecast)

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Vienna, final decision:

 

May the 25th, and the meeting in Vienna, is crucial date for Oil market. The day when everything is going to be way more clear. Also the day when OPEC will again show that despite all the concerns and all the market fuss it still holds the power over Oil Market;

Presently, the numerous discussions are being led on this subject. Furthermore there are many predictions and different attitudes about the 25th’s outcome.

However, based on the numerous information and data coming straight out from current market events , it is very likely that the Oil cuts are going to prolong. They may even become deeper and that way impact the market forcefully.

 

Pre-meetings: Wednesday & Thursday

 

The OPEC’s officials, as well as the representatives of 13 league countries, along with OPEC’s Vienna secretariat held meetings on Wednesday and Thursday. Discussing the market, and agreeing on the forthcoming decisions.

Some OPEC sources are saying that the Meeting of Economic Commission Board will be concluded in Friday (today). Although it should have been finished yesterday.

“We have not agreed on final scenarios…”

 

Different sources:

 

There are sources which predict that OPEC’s extension will depend on estimated growth in supply from non-OPEC producers and U.S. oil outputs; but one thing is for sure, OPEC’s power over Oil market is still the strongest.

Even Saudi Arabia and Russia agreed that Further output cuts are desperately needed in order to keep market stabile. The extension will be for sure agreed until March 2018.

The final decision will be the outcome of Thursday, May the 25th when all the OPEC and non-OPEC Oil producers (allies) will together agree on prolonging the cuts in oil production.

Now the Oil prices which are trading at level of $53 a barrel, earned their support from reduced output due to high inventories.

Also the producers which are not the members of OPEC family, and those who are not participating in these cut deals; lowered their production and limited the drilling.

“Today’s meeting is just informative, nothing major…”

Reuters is reporting that by some of the OPEC sources, today’s meeting is only going to be informative. No final agreements will be brought. But it is definitely important for definitive decision which is about to come out on May the 25th.

“Brent crude was up 63 cents at $53.14 per barrel at 0813 GMT. After climbing to $53.20, its highest since April 21… U.S. benchmark crude was up 61 cents at $49.96 a barrel.” (Reuters)

 

SHFE Friday’s morning trade: Copper prices

Economic Events:

  • Canada Core Consumer Price Index (CPI) MoM at actual 0.3%
  • Canada Core Retail Sales MoM came to actual -0.1% while forecast was -0.3%

 

SHFE Today

Observing the copper prices this morning, they were pretty stronger on SHFE. Asia morning trading on Friday May 19 was following positive Chinese economic data and a bounce in crude oil prices.

In the meantime, the three-month copper contract on the LME reached levels of $5 higher to $5,588 per tonne.

It is the strong sales data from China’s air conditioning sector, who has supported red metal prices this morning.

The bounce in crude oil prices has also raised sense across the commodities market, as OPEC members continued to re-affirm their commitment to a rollover in their production cut agreement.

But looking the copper price in forthcoming future; the Slowdown in Chinese housing market and political shakes in USA will definitely rise the curb in prices.

USA political crisis & China home prices

Threats from political crisis in the USA are real. It is probably going to delay US president DonaldTrump’s proposed infrastructure spending and tax cut plans. Which affects the base metals markets.

China’s growth of home prices cooled again in April. Followed by a brief up rise in March, as tougher market restrictions introduced by local governments took effect.

According to data released by China’s National Bureau of Statistics, prices climbed in 58 of the 70 mainland cities tracked by the bureau, down from 62 in March. (Metal Bulletin)

“The net long position of non-commercial traders on both the LME and Comex have been falling over the past few weeks and are now at levels last seen before the Trump trade rally started.” (ANZ Research)

 

 

Copper output in China: April data

Firstly, latest NBS data shows that China produced 724,000 tonnes of refined copper in April, which makes it up 5.5% year-on-year. Year-to-April production rose 7% year-on-year to 2.86 million tonnes.


Secondly, losses in the SHFE-LME copper arbitrage remained at over $100 per tonne on Thursday. Thirdly, copper stocks at LME warehouses rose 750 tonnes to 340,350 tonnes on Thursday. While deliverable copper stocks at SHFE warehouses slipped 874 tonnes to 71,420 tonnes.

 

Other Base Metals

Observing the SHFE July aluminium contract, it climbed 0.79% or 110 yuan to 14,040 yuan per tonne. While the July zinc price rose 0.35% or 75 yuan per tonne to 21,405 yuan per tonne. Continuing with june lead price which dipped 0.51% or 80 yuan per tonne to 15,455 yuan per tonne. Later, the SHFE September nickel contract was 530 yuan or 0.7% higher at 76,040 yuan per tonne.
September tin price moved up 590 yuan or 0.41% to 144,550 yuan per tonne.


Currencies & data  

The Brent crude oil spot price rose $0.38 to $52.90 per barrel. The Texas light sweet crude oil spot price gained $0.39 to $49.77 per barrel.
Shanghai Composite index stood at 3,090.59 recently, up 0.01. The dollar index edged 0.04% lower to 97.81 as of 04:53 BST on Friday.

Saturday: Donald Trump’s Visit to Saudi Arabia; Ryadh CEO forum

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Firstly, Donald Trump is visiting Saudi Arabia this Saturday. The Saudi Aramco is going to conclude deals with 12 United State’s companies during this visit.

Secondly, Saudi Aramco plans to push and develop the local workers and manufacturing in all the possible ways. According to sources, this is part of Saudi Aramco’s plan to develop their operations in different areas. They plan to make deals with Oil companies, etc. Schlumberger, Halliburton, Baker Hughes, and Weatherford.

Thirdly, amid these plans, Aramco also intends to conclude agreements with other important companies, among others even: General Electric, National Oilwell Varco, Nabors Industries and Rowan Companies.

Fourthly, Reuters reported that when trying to reach Aramco and ask them about this subject; no one was available to comment.

 

Aramco’s plans dating from 2015

 

Following, IKTVA programme was launched in 2015 by Saudi Aramco. The idea of this programme was to double the amount of ”local produced energy related” and all similar goods to 70%. The year for this aim was 2021.

Furthermore, observing the past periods, Aramco cooperated with U.S management companies. They were covering the important projects which collided U.S. management and Aramco operating parts. The aim was to upgrade the Oil potential and develop the oil businesses in country.

“The upcoming partnerships will boost bilateral investment towards localisation.” (Reuters)

 

IKTVA closer

Aramco signed deals with drilling firms Rowan and Nabors Industries to establish joint ventures under the In-Kingdom Total Value Add programme. This happened last year, due to Aramco’s idea to develop this programme at the high levels.

IKTVA  is going to help in developing 500,000 jobs for Saudis. Both directly and indirectly, connected to the everyday operations.  

In forthcoming period Saudi Arabia is planning to change structure of its economy, in a way. It wants to diversify the economy, and widen its spectre aiming not to rely only on oil exports. Aramco will mainly participate in these massive projects. It is a main part of Vision 2030 economic reform drive.

The Engineering companies who support Aramco will sign these agreements too. Some of which are: KBR and Jacobs Engineering, as well as McDermott and Honeywell.

 

Saudi-U.S. CEO forum

This Saturday in Riyadh, the main event which is taking place is an inaugural Saudi-U.S. CEO forum. Most noteworthy, several important deals will be signed. Covering the areas of: defence, electricity, oil and gas, industrial and chemical sectors.

The new documents, in form of licences will be signed; giving the U.S. companies rights to operate in Kingdom, and that way have their power diversified on bigger theritory. And at the same time, giving them the power to influence Saudi’s energy market.

 

Vessels with U.S. Oil en voyage to Asia; as OPEC measures extending cuts

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TOP 5 events in Today’s Market:

  • More Trump drama as White House turmoil deepens
  • Dollar struggles to recover from worst day in almost a year
  • Global stocks extend slump amid Trump jitters
  • Oil slides as investors weigh U.S. drilling, extended OPEC cuts
  • British pound rises above $1.30 for first time in 8 months

For further info on these subjects: www.investing.com

 

Cargoes:

According to current news, nearly 8 tankers are now en voyage from the U.S. to Asia. The one of them is carrying a cargo of Southern Green Canyon oil. Which japanese refiner Cosmo Energy bought. The other carries Alaskan North Slope cargo which is expected to come to Asia in about eight months.

The United States drillers are using the favorable prices to sell their Oil and that way they are strongly affecting the market. It is making OPEC less powerful to impact the global Oil market. The next week is crucial for Oil prices and movements in Oil market, because OPEC is going to meet in Vienna on May the 25th.

The market members, and all the OPEC allies are trying to leave the oil output at a current level, but the U.S. drilling is constantly affecting all the market happenings. Their ”relatively cheap” prices have buoyed exports going to Asia.

 

The forecasts for further U.S. Oil output:

U.S. Oil is expected to gain a quantity of 1000000 bpd, with most of it going straight to Asia. U.S. crude oil exports already came to a level of 1.09 million bpd. Observing the recent drilling (period of past few months) those are the levels highest on record according to U.S. government data. In case these amounts remain elevated, it can happen that they come over the 1.2 million bpd. 1.2 million was the February’s amount.

“We expect that momentum to continue when Dakota Access Pipeline opens, and as more Permian production hits Corpus Christi docks.”  (Sandy Fielden, director of oil and products research at Morningstar said) (Reuters)

Based on EIA info, United States Oil production rose for 10%. Which shows that levels of 9.3 million bpd are serious levels, and that if the production goes further, OPEC’s role in the global market will be really questioned.

 

Tempting Arbitrage:

Wednesday(17.05.) was the day when U.S. crude touched a 6-week high. It Immediately affected the traffic going to Asia; It shows as an possible extension of U.S. exports finding their way to Asian customers.

– “Early May spot prices showed both Brent and Dubai trading at around a $3 per barrel premium to Brent and WTI Cushing, which is an open window,” said Fielden. (Reuters)

Bahamas-flagged Suezmax is carrying Alaskan North Slope crude oil to Asia. This is based on the Vessel tracking data. Half of this crude is sold, half is unsold. (Reuters)

In the meantime, the Cosmo Energy has an Aframax vessel Almi Star with 300,000 barrels of Southern Green Canyon crude and Domestic Sweet Blend outside of Houston. Later it is picking up for further 300,000 barrels of Maya crude at Dos Bocas, Mexico.

This ship will go through the Panama Canal. Afterwards it will transfer crude to a larger Suezmax vessel loaded with 400,000 barrels of Mexican Maya crude for a voyage to Asia.

When asked to comment on this subject, The Suezmax P66 refused to comment.  Actually they did not answer the e-mail on this, while the Cosmo Energy refused to comment.

 

Industrial Metals in China

Industrial metals complex

There is so much difference in individual metals. Observing the supply data, it is actually the demand side of the fundamental ledger that has dulled the metals’ shine.

The most interesting part is that China is impacting the whole market with its ”metal operations.”

As the last year metals were caught out by the firm policy of stimulus last year, they were having a nice back up. Now, industrial metals are reacting really negative to Beijing’s shift to policy constriction.

Watching the market analysts and their comments, it appears that China came from metallic buy to metallic sell.

 

The real question is, are they wrong?

 

China’s Selling

Firstly, at the beginning of process, The first commodity which sent signals about the change of stance in China’s policies was definitely Iron Ore.

Same time last year, the Dalian contract heralded a new stimulus: infrastructure and property grows and nice trends in recovery of these. Now, the current slide in its growth has indicated that the Chinese policy cycle maybe started again.

”It’s noticeable that volumes and open interest have picked up as Dalian iron ore has fallen, suggesting it is being used to express a negative view on China’s immediate growth prospects.”

”Speculative money has been steadily leaving the market over the recent weeks with money manager net length sliding pretty much across the board since late February.” (Andy Home)

Surely, nickel had the worst hit. Aluminum was the least affected, reflecting the former’s overwhelmingly negative and the latter’s more positive supply picture.

LME broker Marex Spectron’s alternative explanation is that money men are net short on zinc, nickel and tin. They are neutral on lead, and marginally long on copper.

Aluminum is the only one showing a sizeable net long. And even that is much reduced relative to earlier this year.

 

A change of the cycle

Secondly, seems like the metal markets are actually ”dancing on” a pre-written script.

Observing  the London LME Week last October: Back then, everyone was short-term bullish but medium-term wary on China.

That time, there existed a thought and agreement amid consensus, that the Beijing stimulus package will impact the second quarter of 2017. Causing a slowdown in most important metals, who are main important parts of the Chinese economy.

The fears of past now seem to have a very good sense.

Beijing aims to force banks to clean their data, and adjust their balance-sheets. This stimulus given by a government was meant to inspire the events of calculating the good position of  Beijing’s financial institutions and banking system.

But as a result, industrial production and fixed asset investment growth happen to have slowed down meaningfully.

Both official and unofficial purchasing managers indices are falling down, suggesting that manufacturing activity has recently topped out.

And China’s metallic imports are oscillating at subdued levels. Observing the copper imports, they fell down by almost 28 percent y-o-y in the first quarter.

People were expecting all of this actually,

Libya, Nigeria oil output causes worries, geopolitical risks still present

Growing oil output in Libya and Nigeria is causing worries on OPEC’s ability to boost up crude prices.  Also, constant conflicts in the two nations might possibly keep a cap on their output.

Libya’s production came at levels higher than 800,000 bpd. It is the first time since 2014. Back then the civil war broke out. In the meantime, Nigeria is refreshing big infrastructure damages; caused by military attacks. Last year, they almost cut country’s production for 50%.

Libya

Libyan commander said to put out a power-sharing agreement, which will be beneficiary for country un every way. It will also have impact on oil supply. They have sent the General Khalifa Haftar to meet with UN-backed Prime Minister Fayez al Sarraj.

Still the ”risk officials” believe it won’t be easy to keep stability in next few months.

Impacted by these happenings, the firm projects oil exports will fluctuate between 500,000 and 700,000 bpd. Till the end of 2017.

Following, funding problems and a lack of foreign workers at the National Oil Corp is definitely going to limit the risk that oil output will boost.

Geopolitical risks still remain very high in Libya.

 Nigeria’s militants ended their attacks on infrastructure

Niger Delta Avengers, known as a Nigerian military group which attacks the infrastructure projects, now ended their ”operations”. And at the same time they allowed major pipelines to continue pumping crude oil again.

The militants earlier requested for a larger share of the nation’s oil wealth for Deltans. They now feel like they have a voice in the capitol.

Simultaneously, the non-military approach used by Osinbajo, which includes promises of development money, has undercut the case for militancy.

But President Muhammadu Buhari has been abroad for much of the year receiving treatment for an undisclosed illness. That creates a political opportunity for vested interests in Buhari’s inner circle, who are uncomfortable with the northern-born president’s relatively close relationship with his deputy. This could undermine militants’ trust in the capitol to the extent Osinbajo is marginalized. (CNBC reporter)

“At the moment it would be very difficult, but not impossible. I can’t see a path to that kind of outcome, but this is Nigeria,” said a Nigerian source.

RBC Capital Markets lists Nigeria at its highest geopolitical risk level, due to “the potential for a turbulent political transition.”

Exemptions continue?

Despite concerns about growing oil supply, there is no sign yet that OPEC will push Libya and Nigeria to turn off the tap when they meet next week.

The cartel could ask a production shutter similar to one given to Iran. Iran is allowed to raise outputs to a certain point. As it is rebuilding its energy industry, after years and years of crippling sanctions.

Nigeria’s oil minister said in January his country will consider reductions once its output returns to 1.8 million barrels a day, but he didn’t say how deeply it would cut.

“It remains to be seen whether there’s political will behind that.” Cheto said. “A lot of that will depend on whether Buhari consents to it.” (CNBC)

 

Iran agrees on extending the cuts, if allies sign

17 May, Wednesday: You should know about Today’s Market:

  • Concerns over Trump dominate headlines
  • Fed rate hike bets continue to recede
  • Dollar continues decline, gold strengthens on stimulus delay concerns
  • Global stocks shift to risk-off mode on Trump worries
  • Oil slips on crude inventory build

For further info on these subjects, visit: http://www.investing.com

Iran’s Oil

According to some unofficial news coming straight from Iran, the OPEC’s third largest producer is interested in participating in further oil output cuts. In condition that there is of course, an agreement between other participating countries.

Saudi Arabia and Russia, concluded a deal on Monday saying they will extend output cuts for further 9 months, entering the 2018. The aim is to erode a existing glut. These 9 months would be more than 6 months previously discussed.

 

Kuwait

Kuwait, as one of the producers, said on Tuesday it supports the proposal.

Iran was the only OPEC supporter agreed to boost its output under the supply cut deal. It will hold presidential elections on Friday. The Iranian position is less predictable, but it will soon be very clear.

“This statement shows the commitment of OPEC and major non-OPEC oil producers to bringing stability to the oil market, in which is essential to have security of supply in coming years.”(Reuters)

– Iran will probably agree to a 9-month prolong of cuts, when OPEC and non-OPEC countries meet in Vienna,  on May 25. Assuming that other producers, for example Iraq, also will accept the deals.

 

Last year talks

Previous year, talking about the supply cut deal, Iran effectually argued to be allowed room to pump more, because it lost market share while being under Western sanctions. Back then they were raising the question of whether Tehran would sign up for a longer supply cut.

 

Presidential Elections In Iran

Friday is the day of presidential elections in Iran. President Hassan Rouhani is Facing 5 other candidates, for a second term, who are mostly prominent hardliners.

Bijan Zanganeh, Iranian Oil minister, in his speech on May 6, said he thinks producers are likely to extend the OPEC-led deal whiles he did not give a timeframe. He also added, by some real forecasts $55 is suitable price for oil.

Prices have gained back-up from the supply cut pact. But also, high inventories and rising U.S. production have acted as a brake on the recovery. Brent crude was trading at $52 on Tuesday.

“Low oil prices may bring satisfaction for some consuming countries in the short run, but in the long term as a result of reduced investment in new oil production, they could end up paying a much higher price for a barrel of oil.”

Some of the analysts predict a humble price recovery as likely in the summer months. In summer months it happens that U.S. gasoline demand seasonally rises, citing factors such as a likely drawdown in inventories.

“I think prices will move up to $51-$55 and in August may go to even $58.

Copper Price Peaks Higher in SHFE

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Economic Calendar Today:

  • United Kingdom Average Earnings Index + Bonus rose to actual 2.3%, while forecast was 2.2%
  • UK Claimant Count Change. It came to 25.5K while the expected was -3.0K
  • European Consumer Price Index (CPI) y-o-y rose to actual 1.9% while the expected was 1.8%
  • United States Crude Oil inventories at -0.930M, while the forecast was -2.333M

Inspired by www.investing.com

 

Morning Trade on SHFE

Amid expectations of increased Chinese demand and a weaker dollar, copper prices on the SHFE grew higher during Asian morning trade on May 17.

The most-traded July copper contract on the SHFE rose 210 yuan ($30.48) to 45,380 yuan per tonne as of 03:33 BST. Open interest of the contract was at around 216,944 positions on Wednesday morning. (Metal Bulletin)

Stronger demand has seen copper prices well backed-up this morning.

Shanghai copper premiums went up this week, because of a rise in buying interest from traders. As well as limited availability for authority and nearby bills of landing.

In addition, major Chinese copper producer Jiangxi Copper said on Tuesday that the country’s copper demand rose 22% month-on-month in March to 822,500 tonnes. Mainly driven by the property market and air conditioner sector.

 

Economic data

US April industrial production rose 1.0% month-on-month – the strongest monthly gain in three years.

“The data pulse overnight was robust, but market moves were more cautious, with US interest rate expectations trimmed and the dollar remaining under pressure,” (ANZ Research)

The dollar index was 0.13% weaker at 97.97 as of 04:00 BST on Wednesday morning.
Market is keeping eye on China’s One Belt One Road (OBOR) policy, though funding restrictions remain a key concern.

“Due to funding constraints, we do not expect OBOR opportunities to become meaningful over the next few years for China. Other than perhaps in very few selected sectors like railway equipment. We believe that, for investment demand, investors should focus on domestic stimulus policy which is far more influential on sectors including resources, materials, machinery and contractors.”  (M.Lynch. Research)

LME stocks

Beginning with LME copper stocks, they fell in today’s trade  by 2,650 tonnes to 322,500 tonnes. FIrstly, deliverable copper stocks at SHFE warehouses rose 799 tonnes to 72,742 tonnes yesterday.
Secondly,  losses in the SHFE-LME arbitrage held at around $90 per tonne. But some buying interest remains. Traders are more active in buying in order to deliver long-term tonnages.

Other base metal contracts

Observing the The SHFE July aluminium contract, it rose 0.36% or 50 yuan per tonne this morning to 14,015 yuan per tonne. Later, the SHFE July zinc contract gained 0.92% or 195 yuan per tonne to 21,505 yuan per tonne.

When considering the SHFE June lead contract, it slipped 0.13% or 20 yuan per tonne to 15,780 yuan per tonne. The September nickel contract rose 60 yuan or 0.08% to 76,660 yuan per tonne. Finishing with Tin, it’s contract was 1,050 yuan or 0.74% higher at 142,050 yuan per tonne.

West Texas drillers could weaken any OPEC agreement on extending the cuts

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All the Oil producing countries which have a deal with OPEC, along with Russia, can extend their deals. But at the same time this will be a green light for United States oil producers.

If the price oscillates following levels between $50 and $60, these are the great news for the U.S. oil drillers. They will gain profit on way broadly group of drilling sites. OPEC’s new deal could speed up the market rebalance. Rather, the numerous U.S. shale drillers could also release bigger amounts to surpass OPEC’s price gains.

Mainly the market analysts wait for oil price to rise close to $60, or even $60 by the end of the year.  But the prices are not expected to climb much higher.

“Basically U.S. supply is coming on faster than we anticipated. Now you have a higher inventory level to begin with, and a slower decline. That means in our view, prices are likely to be lower on average.” (Francisco Blanch, Bank of America Merrill Lynch.)

“The Brent crude will come to average $54 per barrel this year, from an average $61 per barrel. ”

He doesn’t expect much of an increase neither for 2018. The Brent will probably gain the price of  $56 per barrel, versus his previous forecast of an average $65.

 

Different opinions

Ed Morse from Citigroup said he thinks it would be a way better if the OPEC agrees on a deeper cuts.

“I think this market will re-balance itself very quickly. The extension alone should result in deeper cuts.”

Deeper cuts would mean an “invitation for cheating” and “a sign of desperation in markets.” He explained that the re-balancing is already happening.

On contrary, Blanch said: “I think it’s pretty risky to deepen the cuts when they’ll be losing market share to shale. It seems to me that Saudi, Russia, and even the U.S., everyone needs oil price leveled at $60. The problem is, that by the laws of nature as well as of the economy, you can’t have both the quantities and the prices.”

Morse: “We don’t think U.S. production is going to stop the re-balancing of the market this year. It’s not enough to counter the cuts that are in place, particularly if they’re being extended.”

“We think next year will be more problematic. The shale drilling will accelerate and U.S. shale alone could meet the new demand in global growth.”

 

U.S. drillers

IHS Markit expects U.S. shale to grow by 900,000 bpd by the end of 2017. By the end of 2017, or entering the early 2018 the U.S. will be giving the record amounts of oil. Based on some U.S. government reports, their production rose to 9.3 million barrels in previous weeks.

“You can certainly say a lot of shale today will be competitive between $40 and $50 a barrel. The question mark is what’s going to happen with costs. We really think the costs this year in the Permian will go up 15 to 20 percent.”  (Daniel Yergin vice chairman of IHS said. “Rising costs will temper activity somewhat.”

Yergin stated that shale is now at medium cost production.

Permian, West Texas

Permian is currently the most active shale. But drilling could open up Eagle Ford in Texas or Bakken in North Dakota, following the upsurge in prices.

“Other plays still remain on the sidelines in this $50 environment. When we were growing at a million barrels in the U.S., it wasn’t Permian. It was Bakken and Eagle Ford.” (Helima Croft, RBC)

“The other thing about shale is it has a very high decline rate. The shale did come back stronger. Rigs are returning and for now it remains largely a Permian story.”

Analysts have expected the market to get a backup from the summer driving season. So far, U.S. gasoline demand has been softer than expected.  That could definitely impact the market, and it should see higher prices this summer .

 

Metals trade today: LME & International Economic Events

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LME Today:

Metals prices on the LME slightly declined during morning trade today. Prices were down for an average of 0.6%.

Recollecting the positive Monday, that had closing prices up for about 0.3%. Nickel had a fall of 1.7%, but the average gain would have been 0.6% led by a 1.2% rise in aluminium price.

Firstly, spot precious metals were up for about 0.4% this morning. Gold prices are up 0.2% at $1,233.50 per oz, the rest are all up 0.5%. This comes after a mixed day’s performance on Monday when palladium prices dropped 1.1%, silver and platinum prices were up around 1.1%, and gold prices were up just 0.2%.

Secondly, observing morning trade in SHFE, copper and aluminium prices were a bit up, with copper prices at 45,220 yuan ($6,555) per tonne.  Other base metals complex are down an average of 0.8%. Spot copper prices in Changjiang are up 0.1% at 45,120-45320 yuan per tonne, while the LME/Shanghai copper arb ratio is weaker again at 8.10.

International Markets & Main Economic Events

Thirdly, Brent crude oil prices are up 0.3% at $51.92 per barrel. The market oscillates on a likely OPEC deal extension. The yield on the US ten-year treasuries is little changed at around 2.33%.

Equities on Monday were firmer, the Euro Stoxx 50 closed up 0.1% and the Dow closed up 0.4% at 20,982. Asia has generally seen follow through buying interest this morning with the Nikkei and ASX 200 up 0.2%, the CSI 300 is up 0.1%, the Kospi is up marginally, while the Hang Seng is bucking the trend with a 0.3% decline.

If we have a closer look, the dollar index is showing weakness again.  It is now leveled at 98.75, having seen a recent high of 99.89. For now the 2017 trend is to the downside, with recent lows at 98.54.

Following, the euro is now stronger at 1.0994, it looks well placed to push higher. Also the Australian dollar at 0.7425, seems to push higher. While the sterling and the yen are flat. Sterling at 1.2912 and yen at 113.49.

Economic data

Japan’s tertiary industry activity slipped 0.2% after a 0.2% climb previously.

later there is data on French and UK CPI and a host of other UK price data and leading indicators, Italian and EU GDP, German and EU ZEW economic sentiment and data on the EU trade balance. US data includes: building permits, housing starts, industrial production, capacity utilization rate and mortgage delinquencies – see table below for more details.

Chinese infrastructure projects

President Xi Jinping’s oath of $78 billion worth of financing for infrastructure projects, indicates the One Belt One Road plan is continuing.  It should be long-term backup for metals’ demand. This affected positively almost all the metals on Monday. But if that will be further trend, we will see soon.

 

Other Base Metals

Nickel started to fall yesterday, while copper and aluminium were showing some weakness this morning. Zinc and lead prices are looking more fragile. Today’s lead prices setting a fresh low at $2,092 per tonne. Unless buying emerges soon, the path of least resistance looks set to remain to the downside.

 

Precious Metals

Most of the precious metals are more solid, their recent price weakness appears to have induced agreement hunting.

Except palladium, where resistance above $820 per oz. It seems to be acting as a cap and lack of upside progress is encouraging profit-taking.  Seems like silver and platinum have currently looked oversold.