Many of the base metals spiked lower on Tuesday; at the day’s lows prices were down an average of 3.9 percent, skewed by an 8.5 percent drop in nickel and a 6.9 percent drop in tin. The sell-offs turned into spikes with the complex closing down an average of 0.6 percent, with nickel closing the day up 1.8 percent, while tin closed off 3.3 percent. We thought the SHFE’s decision to make Norilsk nickel brands good for delivery for against SHFE nickel contracts was going to be bullish for LME nickel, while bearish for SHFE prices, it seems the sell-off in SHFE yesterday dragged LME nickel down too, before reality set in.
Precious metals had a volatile day – at the day’s lows they were down 0.9 percent on average, with silver off 1.7 percent at one stage, while they ended the day mixed with palladium up 0.9 percent, while gold, silver and platinum prices closed down 0.5 percent, with gold at $1,173.50.
This morning the base metals are generally little changed with nickel the exception as is off 0.5 percent having rebounded strongly yesterday, the rest of the complex are either side of unchanged with copper at $5,764.50 and volume has reverted back to low levels with 2,408 lots traded as of 06.07 BST.
Chinese PMI data already out shows a slight deterioration from the flash readings, with the official reading unchanged at 50.2, but that was below an expected 50.5, while the HSBC reading was 49.4 after a flash reading of 49.6 – it was up from 49.2 in May. Japan’s tankan data was stronger and its manufacturing PMI improved to 50.1, from a flash reading of 49.9.
The precious metals prices are stronger tis morning, led by palladium that is up 4.1 percent to $698.80, platinum is up 0.9 percent, gold and silver bullion prices are up an average of 0.2 percent with the gold price last at $1,174.10.
In Shanghai, tin and nickel are rebounding after yesterday’s weakness, they are up around 0.9 percent, but the rest of the complex are lower by an average of 0.6 percent with copper down 0.4 percent at Rmb 42,060. Spot copper in Changjiang is also off 0.4 percent at Rmb 42,500-42,650, the backwardation with the futures has extended to an equivalent of $95 per tonne and the LME/Shanghai copper arb ratio is 1 to 7.35 for July.
Gold and silver in China are mixed with gold off 0.3 percent, while silver is up 0.3 percent.
Equities – remain mixed on the back of uncertainty over Greece with the Euro Stoxx 50 off 1.3 percent, but the Dow was up 0.1 percent yesterday. This morning, Asia is mixed with China’s CSI 300 down 0.6 percent after its recent volatility; the Nikkei is up 0.3 percent, the Hang Seng is closed and the Kospi is up 1.1 percent.
The dollar has been choppy in recent days, the dollar index is last at 95.59 having spiked up to 96.39 on Monday, which was then followed by a drop to 94.67. The euro is holding up remarkably well at 1.1136, but it does have a slight downward bias. Sterling is holding up well, it is at 1.5700, as is the yen at 122.60, the aussie is at 0.7711, the rouble is in low ground at 55.47, while the yuan is stronger despite recent interest rate cuts, it is last at 6.2000.
The economic agenda is busy, we have reviewed the data out of Asia above, data still to be released includes manufacturing PMI out across Europe, UK and US, Bank of England Governor Mark Carney is speaking about the Financial Stability Report and then US data includes: Challenger job cuts, ADP-non-farm employment change, construction spending, crude oil inventories and total vehicle sales – see table below for more details.
The base metals have run into underlying support and prices for the most part are getting some lift off recent weakness, especially those that spiked lower. Copper is the strongest of the complex as it has edged higher in recent days, nickel spiked lower aggressively but has since rebounded, as has zinc and tin to a lesser extent. Aluminium and lead have found some underlying buying, but not much. Overall, sentiment seems weighed down by a subdued Chinese outlook and risk reduction over uncertainty surrounding Greece. Chinese PMI data was only slightly worse than the better than expected flash data, so we wait to see if European PMI data confirms the better flash data that was out last week. If it does, then that might provide more support for industrial metals.
Gold prices are doing their best to hold above support, but the market lacks energy and remains vulnerable, the same goes for silver. Platinum is attempting to edge higher, while palladium has started to rebound from oversold conditions. All the precious metals are in low ground, the PGMs look particularly oversold, so we wait to see if there is follow through buying.
| Overnight Performance | ||||
| BST | 06:07 | +/- | +/- % | Lots |
| Cu | 5764.5 | 2.5 | 0.0% | 898 |
| Al | 1689.5 | -0.5 | 0.0% | 205 |
| Ni | 11960 | -55 | -0.5% | 732 |
| Zn | 1998 | -1 | -0.1% | 442 |
| Pb | 1760.5 | 0 | 0.0% | 83 |
| Sn | 13870 | -10 | -0.1% | 48 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | -0.1% | 2,408 | ||
| Gold | 1174.1 | 0.6 | 0.1% | |
| Silver | 15.71 | 0.04 | 0.3% | |
| Platinum | 1085.7 | 9.7 | 0.9% | |
| Palladium | 698.8 | 27.8 | 4.1% | |
| Average PM | 1.3% | |||
| SHFE Prices 06:27 BST | Change | % Change | |
| Cu | 42060 | -150 | -0.4% |
| AL | 12535 | -85 | -0.7% |
| Zn | 15245 | -100 | -0.7% |
| Pb | 12745 | -100 | -0.8% |
| Ni | 88780 | 740 | 0.8% |
| Sn | 107670 | -930 | -0.9% |
| Average change (base metals) | -0.4% | ||
| Rebar | 2135 | 4 | 0.2% |
| Au | 237.75 | -0.6 | -0.3% |
| Ag | 3457 | 11 | 0.3% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 12:50am | Japan | Tankan Manufacturing Index | 15 | 12 | 12 |
| 12:50am | Japan | Tankan Non-Manufacturing Index | 23 | 23 | 19 |
| 2:00am | China | Manufacturing PMI | 50.2 | 50.5 | 50.2 |
| 2:00am | China | Non-Manufacturing PMI | 53.8 | 53.2 | |
| 2:35am | Japan | Final Manufacturing PMI | 50.1 | 49.9 | 49.9 |
| 2:45am | China | HSBC Final Manufacturing PMI | 49.4 | 49.6 | 49.6 |
| 8:15am | Spain | Spanish Manufacturing PMI | 55.6 | 55.8 | |
| 8:45am | Italy | Italian Manufacturing PMI | 54.4 | 54.8 | |
| 8:50am | France | French Final Manufacturing PMI | 50.5 | 50.5 | |
| 8:55am | Germany | German Final Manufacturing PMI | 51.9 | 51.9 | |
| 9:00am | EU | Final Manufacturing PMI | 52.5 | 52.5 | |
| 9:30am | UK | Manufacturing PMI | 52.6 | 52 | |
| 10:30am | UK | BOE Gov Carney Speaks | |||
| 10:30am | UK | BOE Financial Stability Report | |||
| All Day | EU | Eurogroup Meetings | |||
| 12:30pm | US | Challenger Job Cuts y/y | -22.5% | ||
| 1:15pm | US | ADP Non-Farm Employment Change | 219K | 201K | |
| 2:45pm | US | Final Manufacturing PMI | 53.4 | 53.4 | |
| 3:00pm | US | ISM Manufacturing PMI | 53.2 | 52.8 | |
| 3:00pm | US | Construction Spending m/m | 0.4% | 2.2% | |
| 3:00pm | US | ISM Manufacturing Prices | 51.1 | 49.5 | |
| 3:30pm | US | Crude Oil Inventories | -1.9M | -4.9M | |
| All Day | US | Total Vehicle Sales | 17.2M | 17.8M | |
The post Low metal prices attract some buying interest, especially in the oversold ones appeared first on The Bullion Desk.
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