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Base Metal Market News, August the 21st

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Top 5 things to know today – global markets:

  1. War games start on Korean peninsula
  2. Renewed U.S.-North Korea tensions causing global stocks slide
  3. Dollar still remains defensive on U.S. political tensions
  4. Oil started the week a few percents lower
  5. Maersk sells oil unit to Total for $7.5B as M&A heats up

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

Some useful analysis: https://www.reuters.com/article/global-metals-idUSL8N1L22ES

 

Last Three months – overview:

Lately, there has been some really crazy movement happening in the base metal markets. Observing the All-along summer period, we see few metals hitting their highest level in a decade.

Firstly we must pay our attention to the period of may/juni/july/august 2017. During the whole  summer period, base metal markets trade showed some astonishing positive trends.

Secondly, along with the huge volatility which took place in july, the base metal prices now are hitting the great record levels.

Current prices :

Today, the Zinc price is peaking to the level of 3180.50 ! These levels were not seen since the far 2007.

Furthermore, observing the copper and aluminium prices.. Due to cutted supply in energy markets, their prices are hitting the highest prices since 2014 and 2015. This is definitely a very positive incline in all the base metal prices. Which also makes investors confident about further buying\selling steps.

All of this rallies are happening due to tightened supply. And certainly growing demand in the markets. Global demand is supporting the price rallies and this is spreading fast.

 

China’s demand:

Despite China’s industry showing a slight fade in the metal demand in July, the IMF made average growth forecast for period regarding 2018-2020. As China’s zinc production fell in July, lead output rose by couple percent in this period. Currently Chinese infrastructure now is developing and is kept at solid activity showing strength. 

Aluminium output in China fell 8.2 percent in July as capacity cuts started to take their actions. China makes more than half the world’s aluminium, and it is obviously putting China in the most important world’s suppliers.

 

Copper price movements:

Observing the copper prices and their movement, we also notice the important inclines. From may’s high of about 5786, to august’s high of 6596. Freeport power plant in Indonesia was currently hardly affected by floods taking place there. Due to these floods, one of the workers is missing.

Benchmark copper finished 2.4 percent higher in Friday the 18th of august, at $6,532 having touched $6,576.50, the highest since November 2014.

 

Nickel & lead:

Nickel is currently trading at $11,305,  which is the record level regarding the whole summer period, which is then the highest ever since 2014!

Observing the current lead prices, it is trading at $2376.

In all, having observed the summer 2017 period, we can bring the fine conclusion that base metal markets are quiet recovering.

“Momentum funds are buying the strength, piling in as the price rises.” (Reuters)

“The rallies had been supported by expectations of strong global demand and tight supplies.” (Reuters)

 

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.

LME: Friday base metal prices

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Today’s trade was broadly higher for all the base metal prices. The prices saw a little, but positive movement. Yesterday, prices were following a certain rally during the day, but they dipped just before the close.

Copper is currently trading at $5,560 per tonne. It hit highs of over $5,600 per tonne yesterday afternoon, but fell down at the end of a day.

Speaking about the three-month nickel price, it is starting to recover from last week’s falls. It was trading up at $9,355 per tonne this morning.

Regarding Tin prices, they saw a small decline. All  the other base metals recorded minimal price increases.

Copper price aiming higher

Copper is the most ”popular” over all the base metals currently. Firstly the 3-month copper price was up $17 at $5,560 per tonne.
Copper Stocks fell by 7,350 to 329,375 tonnes.
BHP Billiton is continuing the negotiations for possible sale of Cerro Colorado copper mine in Chile.

“We still see uncertainties over whether domestic consumption will support the decline of inventories, and whether the peak consumption season will turn out to be bullish.” (Metal Bulletin)

China’s deleveraging has had great impact on Market enthusiasm. As well as the optimistic trends.

Base metals increase; decline for tin

Firstly, observing the three-month aluminium price, it was up $12 to $1,887 per tonne. Aluminium stocks were down 8,650 tonnes to 1,556,150.
Secondly, the three-month nickel price is trading at $9,355 per tonne. It is calculated the increase of $45. Following, nickel stocks increased for the fourth day in a row, rising 1,224 tonnes to 380,610 tonnes.

Thirdly, zinc price increased $15 per tonne. It is now trading at $2,606 per tonne. Stocks increased 2,050 tonnes to 345,150. Zinc stocks have risen 10,550 tonnes over the last four days.

The three-month lead price rose $4 to $2,181 per tonne. Stocks rose 350 tonnes to 183,150 tonnes.  Tin was the only base metal to see a decline; the three-month price fell $15 to $19,850 per tonne.

Stocks for tin fell 20 tonnes to 2,310 tonnes after two days unchanged.

Currencies & data

Observing the the dollar index, it was unchanged at 99.64.  The Brent crude oil spot price was down 0.40% to $50.61 per barrel.
In equities, the UK FSTE 100 was up 18.07 to 7404.7. The latest data shows that US PPI data was stronger than expected. At 0.5% month-on-month in April against market expectations of 0.2%.


There is a host of US data out today including CPI, retail sales and preliminary University of Michigan consumer sentiment and inflation expectations, while the EU has monthly industrial production data due.

 

LME Asia week; Hong Kong

 

As this year’s LME Asia Week 2017 draws to a close, reporters and editors who were in Hong Kong during this week round up the key themes and topics discussed at the fifth annual event. Metal Bulletin reported about 10 main topics that were discussed in Hong Kong. They wrote about comments, ideas and CEO’s discussions that happened there, and gave a nice brief summary on this closing.

Visit http://www.metalbulletin.com for further info.