This morning the base metals are rebounding following on from yesterday’s downward spikes that left underlying tails on most of the metals. The base metals complex is up an average of 1.6 percent with nickel leading the way with a 3.9 percent rally to $11,320, while the others are up between 0.7 percent on aluminium and 1.5 percent on copper, which is at $5,569. Volume has been significant with 16,227 lots traded with 7,294 lots of copper and 4,444 lots of nickel.
Silver is leading the precious metals higher this morning with a 2.3 percent gain to $15.42, followed by palladium that is up 1.5 percent, platinum that is up 0.7 percent and gold that is up 0.5 percent at $1,164.
In Shanghai, the base metals are up an average of 3.4 percent, led by a five percent gain in copper to Rmb 40,460, tin is up 4.4 percent and lead is up 4 percent, while nickel is up 2.6 percent. See table below for more prices. Spot copper in Changjiang is up four percent at Rmb 41,200-41,400, the backwardation with the futures is weaker at an equivalent of $150 per tonnes, in from around $200 earlier in the week, while the LME/Shanghai copper arb ratio is at 7.41 – this suggests the arb window will be open for some traders.
Gold and silver in Shanghai are up 1.2 and 1.6 percent respectively.
Equities – the Euro Stoxx 50 closed up one percent, although the Dow closed off 1.5 percent, but a trading halt on the NYSE for a few hours may have made traders nervous. The mood in Asia is upbeat, as China’s CSI, having worked lower earlier, is now up 7.2 percent with many shares limit –up after a ten percent rise. The Nikkei is up 0.6 percent, the Hang Seng is up five percent and the Kospi is up 0.6 percent.
Currencies – the dollar index has slipped back to 96.14, the euro is at 1.1090, sterling is edging lower, last at 1.5396, as is the yen after recent safe-haven buying, it is last at 121.36, the aussie at 0.7476 is recovering, the rouble is weak at 57.04 and they yuan is edging lower at 6.2089.
On the economic front, China CPI edged higher to 1.4 percent, up from 1.2 percent, which is a move in the right direction, although PPI fell 4.8 percent but given commodity weakness that is not surprising. Data out already included Japan’s machinery orders, M2 money stock and the German trade balance. Later we get data on UK interest rates, level of the asset purchase facility and the MPC statement and US data includes initial jobless claims, natural gas storage and FOMC member Lael Brainard is speaking – see table below for more details.
The base metals have undergone a significant nervous sell-off since Monday with the Greece ‘no’ vote the catalyst but the crash in China’s equity markets has been the main worry for the metals we think. With prices now putting in the right hand side of the downward spike, we should get a good feel for how much buying there is. We imagine there is considerable short-covering, some bargain hunting and option delta hedging, but we wait to see how much follow through buying there is too. The sell-off in recent days may well have cleared out a lot of longs and we expect further consumer pricing to take advantage of these low prices if the selling has now run its course.
Gold did in the end hold up quite well in recent days, albeit in low ground and near support. It may not have rallied, but it did hold its value. The other precious metals have all been weaker, especially the PGMs that have become even more oversold. We would expect bargain hunting in these now.
| Overnight Performance | ||||
| BST | 07:26 | +/- | +/- % | Lots |
| Cu | 5569 | 83 | 1.5% | 7294 |
| Al | 1682 | 11 | 0.7% | 1168 |
| Ni | 11320 | 420 | 3.9% | 4444 |
| Zn | 2006 | 26 | 1.3% | 2740 |
| Pb | 1794 | 14.5 | 0.8% | 545 |
| Sn | 14365 | 180 | 1.3% | 36 |
| Steel | 300 | 0 | 0.0% | Total |
| Average (BM ex-Steel) | 1.6% | 16,227 | ||
| Gold | 1164 | 6.2 | 0.5% | |
| Silver | 15.42 | 0.35 | 2.3% | |
| Platinum | 1035.3 | 7.3 | 0.7% | |
| Palladium | 662.6 | 9.6 | 1.5% | |
| Average PM | 1.3% | |||
| SHFE Prices 07:40 BST | Change | % Change | |
| Cu | 40460 | 1910 | 5.0% |
| AL | 12340 | 195 | 1.6% |
| Zn | 15195 | 435 | 2.9% |
| Pb | 12825 | 490 | 4.0% |
| Ni | 83900 | 2120 | 2.6% |
| Sn | 108810 | 4610 | 4.4% |
| Average change (base metals) | 3.4% | ||
| Rebar | 2015 | 76 | 3.9% |
| Au | 235.35 | 2.7 | 1.2% |
| Ag | 3336 | 52 | 1.6% |
| Economic Agenda | |||||
| BST | Country | Data | ACTUAL | Expected | Previous |
| 12:01am | UK | RICS House Price Balance | 40.0% | 37.0% | 34.0% |
| 12:50am | Japan | Core Machinery Orders m/m | 0.6% | -4.8% | 3.8% |
| 12:50am | Japan | M2 Money Stock y/y | 3.8% | 4.0% | 4.1% |
| 2:30am | China | CPI y/y | 1.4% | 1.3% | 1.2% |
| 2:30am | China | PPI y/y | -4.8% | -4.6% | -4.6% |
| 4:45am | Japan | 30-y Bond Auction | 1.43|2.2 | 1.53|3.1 | |
| 6:59am | Japan | Prelim Machine Tool Orders y/y | 6.6% | 15.0% | |
| 7:00am | Germany | German Trade Balance | 22.8B | 20.6B | 21.5B |
| 12:00pm | UK | Official Bank Rate | 0.5% | 0.5% | |
| 12:00pm | UK | Asset Purchase Facility | 375B | 375B | |
| Tentative | UK | MPC Rate Statement | |||
| 1:30pm | US | Unemployment Claims | 274K | 281K | |
| 3:15pm | US | FOMC Member Brainard Speaks | |||
| 3:30pm | US | Natural Gas Storage | 86B | 69B | |
| 6:01pm | US | 30-y Bond Auction | 3.14|2.5 | ||
The post Metals rebound, now waiting to see quality of the buying appeared first on The Bullion Desk.
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