Market and product

The base metals tried higher yesterday and at the highs of the day the metals were up an average of 1.2 percent, but they pulled back by the close to end up an average of 0.4 percent. Aluminium ran into selling after setting a fresh high for the year at $1,709, it closed down 0.7 percent at $1,683. Nickel and zinc were up 0.9 percent, while copper rose 0.7 percent to $4,809. Precious metals were mixed, gold prices closed up 0.1 percent at $1,351.75, silver closed off 0.2 percent, platinum was up 0.7 percent, while palladium rallied 2.2 percent.

This morning, the base metals are mixed between unchanged to down slightly, copper is at $4,808, roughly where it was this time yesterday, tin is also little changed, while the rest are off between 0.1 percent for aluminium and 0.4 percent for lead. Volume remains low at 2,509 lots – this has been one of the quietest weeks in terms of early trading volume we have seen in a long time.

Precious metals are down 0.4 percent on average this morning with gold prices at $1,347.40.

In China, the base metals are up 0.3 percent on average, led by a 0.9 percent in lead, the rest are up between 0.1 and 0.3 percent with copper up 0.2 percent at Rmb 37,300. Spot copper in Changjiang is little changed at Rmb 37,170-37,290. The spread is flat and the LME/Shanghai copper arb ratio is at 7.76.

In other metals in China, iron ore prices are up 1.7 percent, steel rebar is up 0.6 percent, gold prices are up 0.1 percent and silver is off 0.3 percent. In international markets, Brent crude is up at $50.96.

Equities were slightly buoyant yesterday with the Euro Stoxx 50 up 0.5 percent while the Dow closed up 0.1 percent and in Asia the markets are mixed with the Nikkei up 0.5 percent, the Hang Seng is up 0.3 percent, the CSI 300 is off 0.3 percent, the ASX 200 is up 0.3 percent and the Kospi is off 0.1 percent.

In FX, the yen is off its highs, last at 100.18, the dollar index is at 94.33, the low yesterday was 94.08, the euro is at 1.1334, sterling is at 1.3140 and the aussie is weaker at 0.7641. The yuan is weaker at 6.6447, as are most of the emerging market currencies we follow, while the rouble is firmer at 63.57.s

The economic calendar is light, Japan’s all industries activity rose one percent, after a 1.3 percent decline previously, Germany’s PPI is out later as is the UK public sector borrowing requirement.

The base metals are split between those trying to push higher, mainly aluminium, lead and zinc, while tin is consolidating and copper and nickel are trying to avoid selling off. Aluminium’s turn back from fresh highs and with other markets appearing to be capped, suggests there is overhead selling around – probably producer selling. This will need to be absorbed if the rallies are to extend, but with volumes light that may take some doing. The underlying trends, however, still seem to be to the upside, even if sentiment is generally not that bullish.

Gold prices continues to trade sideways in high ground and seem to be waiting for a catalyst to move higher again, there is a danger of stale long liquidation should that catalyst not emerge. Silver is drifting as it consolidates, while the PGMs continue to consolidate, but look stronger overall.