Market and product

Zinc and aluminium price continue to rise

Base metals were mixed yesterday, with the aluminium price up one percent at $1,962.25, the copper price was up 0.1 percent at $7,132.50, while the rest were off between 0.1 percent for zinc and 0.6 percent for tin – for now most of the metals are holding up well.

This morning trading in Asia has been quiet with 3,450 lots traded as of 06:15 BST, the base metals are up an average of 0.3 percent, with the zinc price once again taking the lead with a 0.6 percent gain to $2,315, the nickel price is up 0.3 percent at $19,390, copper is up 0.1 percent at $7,136.50 and the rest are up 0.2 percent.

Data out of China this morning is generally slightly better than expected - GDP rose 7.5 percent, which was slightly better than the previous reading of 7.4 percent, which was also what was expected. Industrial production was stronger at 9.2 percent as was fixed asset investment at 17.3 percent and retail sales came slightly worse than expected with a rise of 12.4 percent – see table below for more details.

In Shanghai, the futures are up an average of 0.7 percent, the zinc price is up 1.7 percent at Rmb 14,115, aluminium is up one percent at Rmb 13,770, the copper price is up 0.1 percent at Rmb 50,550 and the lead price is off slightly at Rmb 14,115. Rebar is up 0.1 percent at Rmb 3,135.

The spot copper price in Changjiang is off 0.2 percent at Rmb 50,850-51,000, the backwardation is at a relatively low of $70/tonne, while the LME/Shanghai copper arb ratio is weaker at 1 to 7.08. All in all copper is looking weaker again in China.

Equities – the Euro Stoxx 50 dipped one percent yesterday and the Dow was little changed, while Asia is also little changed with the Nikkei, Hang Seng, CSI 300 and Kospi all up less than 0.1 percent – the fact that Chinese data has not provided a boost suggests the markets are nervous.

Currencies – the dollar firmed yesterday and is stronger this morning with the dollar index at 80.45, the euro is weaker at 1.3558, sterling is at 1.7130, the aussie is weaker at 0.9332 as is the yen at 101.74, while the yuan is steady at 6.2060.

The economic agenda is busy, on top of the Chinese data, we get Italian and EU trade data, UK employment data and a host of US data including PPI, TIC long term purchases, industrial production, capacity utilisation, NAHB housing index, crude oil inventories and the beige book. In addition, Fed Chair Janet Yellen and FOMC member Richard Fisher are speaking – see table below for more details.

The base metals are split into to two camps with zinc and aluminium extending their rallies on an almost daily basis, while the rest are hovering is sideways ranges below recent highs, the exception being tin that remains heavy. On balance, we still expect selling to cap the base metals, this seems to be happening on most of them, we expect it to happen in zinc and aluminium before too long and that might then lead to some pull-backs. We still feel the markets are vulnerable to a more broad base correction should equities weaken

Metals Overnight Performance