China copper imports fell 2.8 percent in June from May, aluminium exports continue to climb – neither bullish indicators for metal prices
On Friday the base metals closed off 0.6 percent on average, while precious metals closed up 0.9 percent.
This morning the base metals are down across the board with average losses of one percent, led by a 2.1 percent drop in nickel to $11,005, while copper is off one percent at $5,525.50. Volume has been above average at 5,555 lots, with copper trading 3,539 lots and nickel 1,073 lots. A fall in gross Chinese copper imports to 350,000 tonnes from 360,000 tonnes seems to be weighing on sentiment this morning, as does a 9.8 percent rise in aluminium exports.
Precious metals are consolidating, they are off 0.2 percent on average this morning, with losses of between 0.1 percent on gold and platinum and 0.5 percent in palladium. Gold has traded a range of $1,159.20 to $1,164.30, last at $1,161.40.
In Shanghai, the base metals are down an average of 1.3 percent, led by a 3.2 percent drop in nickel to Rmb 81,520, followed by a 1.7 percent drop in copper to Rmb 40,040 and a 1.3 percent drop in tin – see table below for more details. Spot copper in Changjiang, is down 1.8 percent at Rmb 40,900-41,050, the backwardation is strong at an equivalent of $162 per tonnes, while the LME/Shanghai copper arb ratio is at 7.41, which should mean that the arb window is open for some traders. Even though the arb window has been open at times in June, the Chinese import data shows no increase in exports.
Gold and silver prices in Shanghai are little changed.
Equities – the rebound in Chinese equities has flowed through to this week with the CSI 300 up 3.7 percent, following gains on Friday of 1.2 percent on the Dow and 3.2 percent in the Euro Stoxx 50. The rest of Asia is also upbeat with the Nikkei up 1.7, the Hang Seng is up 0.5 percent and the Kospi is up 1.6 percent. Premarket equities in Europe are looking to open lower by around 0.5 percent as there has been no deal on Greece yet.
Currencies – the dollar index is slipping, last at 95.91 – as a safe-haven barometer this suggests the markets are less worried than they have been of late. The euro is firm too at 1.1143, as is sterling at 1.5508, while the aussie is weak at 0.7448, the yen is weakening too, last at 122.61, while the rouble is at 56.49 and the yuan is at 6.2077.
Data out already included China’s trade balance, which showed exports picked-up 2.1 percent, but imports dropped 6.7 percent. Japan’s revised industrial production dropped 2.1 percent and tertiary industry activity slipped 0.7 percent. Later we get the UK credit conditions survey and the US Federal budget balance. In addition, the Eurogroup meetings over Greece continue.
The base metals rebounded mid-week last week from the weakness seen at the start of the week, but there is a lack of follow through buying with prices slipping lower again. Some metals are holding up better than others with aluminium, zinc and tin holding on to more of their gains than the others. The rebound in Chinese equities, if it continues, may well give sentiment a lift, especially with prices down at these low levels. A Greek deal could also lead to a relief rally, although there is no certainty of that given Greece’s political gamesmanship. For now, we would expect dip buying and would prepare for a relief rally.
Gold prices are holding up, as are silver prices, but the PGMs remain weak and washed out with prices struggling to hold on to gains with prices back near their lows. We wait to see what gold’s reaction will be to a Greek deal should one be seen. With gold not getting much safe-haven buying in recent months it follows that there should not be much negative reaction to a deal – but we would not bank on it.
| Overnight Performance | ||||
| BST | 06:30 | +/- | +/- % | Lots |
| Cu | 5525.5 | -57 | -1.0% | 3539 |
| Al | 1688 | -11 | -0.6% | 299 |
| Ni | 11005 | -235 | -2.1% | 1073 |
| Zn | 1994 | -19 | -0.9% | 377 |
| Pb | 1780.5 | -9.5 | -0.5% | 255 |
| Sn | 14165 | -100 | -0.7% | 12 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | -1.0% | 5,555 | ||
| Gold | 1161.4 | -1.3 | -0.1% | |
| Silver | 15.51 | -0.04 | -0.3% | |
| Platinum | 1025.4 | -0.6 | -0.1% | |
| Palladium | 644.8 | -3.2 | -0.5% | |
| Average PM | -0.2% | |||
| SHFE Prices 06:42 BST | Change | % Change | |
| Cu | 40040 | -680 | -1.7% |
| AL | 12415 | -35 | -0.3% |
| Zn | 15205 | -110 | -0.7% |
| Pb | 12870 | -100 | -0.8% |
| Ni | 81520 | -2680 | -3.2% |
| Sn | 107450 | -1370 | -1.3% |
| Average change (base metals) | 236.5 | -1.3% | |
| Rebar | 2019 | -14 | -0.7% |
| Au | 235.25 | -0.25 | -0.1% |
| Ag | 3392 | 5 | 0.1% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 3:46am | China | Trade Balance | 46.5B | 57.0B | 59.5B |
| 5:30am | Japan | Revised Industrial Production m/m | -2.1% | -2.1% | -2.2% |
| 5:32am | Japan | Tertiary Industry Activity m/m | -0.7% | -0.2% | -0.1% |
| 9:30am | UK | BOE Credit Conditions Survey | |||
| All Day | EU | Eurogroup Meetings | |||
| 7:00pm | US | Federal Budget Balance | 41.2B | -82.4B | |
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