News

LME MORNING – Base metals stumble, sentiment sours amid economic uncertainty

Date Sep 23 2015 16:17:59 Source:

Base metals got off to a damp start on Tuesday, maintaining their downward trend and hitting fresh lows in some – zinc was back at June 2010 lows, tin its lowest since the start of the month and copper at a fresh two-week low.

“This is a level prices seem to be comfortable with. There are short-covering rallies that come in but they don’t last and there is no reason for prices not to reverse,” a trader said.

Forecasts-beating data from China failed to provide any lift – the CB leading index was at 4.7 percent and the trade balance was $2.87 billion.

In equities, the Shanghai composite was last at 3,185.62, up almost one percent, but concerns that China faces a hard landing continue to unsettle markets. Caixin flash manufacturing PMI will be eyed with interest.

Elsewhere, European equities were also under pressure, with the FTSE 100 down 1.87 percent to 5,995.05.

In currencies, the euro fell to close to two-week lows against the dollar after several Fed officials said they were “confident” that interest rates would rise this year. It has since recovered to a barely changed 1.1190.

In the metals, copper dropped under $5,200 to last trade at $5,136 per tonne, down $133 on Monday’s close. More than 8,000 lots have changed hands on Select so far.

In the spreads, cash/Oct is now at a contango of $3, while the benchmark cash/threes is at a backwardation of $8. Stocks fell a net 5,750 tonnes to 330,100 tonnes and cancelled warrants dropped 2,425 tonnes to 63,775 tonnes.

Nickel at $9,765 was down $100 even after global stocks at 452,694 tonnes were down 1,628 tonnes and cancellations jumped 21,846 tonnes to 182,082 tonnes, a move centred on Johor.

Aluminium fell $20 to $1,586. Stocks and cancelled warrants both dropped 8,425 tonnes to 3,216,000 and 1,119,075 tonnes respectively. Pockets of tightness remain: Oct/Nov, Oct/3-mth and Dec/3-mth are at backwardations of $11, $5.25 and $1.50 respectively.

“The main tightness sits between the October date and the end of the month. It is noted that the long has been lending good-sized clips, however,” Triland said.

Lead at $1,685 was down $21. Following yesterday’s 24,825-tonne jump in cancelled warrants, stock movements were routine today – inventories slipped 325 tonnes to 165,125 tonnes and cancelled warrants nudged 175 tonnes higher to 44,700 tonnes. The December/3-month spread is now level, having been backwardated yesterday.

Zinc at $1,635 was $22 lower after 3,200-tonne falls in stocks and cancelled warrants to 602,475 tonnes and 77,525 tonnes respectively.

Tin dropped to $14,870, a $275 loss and its softest since September. The backwardation in its cash/threes ticked lower to $84.

Steel, cobalt and molybdenum were neglected, with no changes to stocks.

Edited by SHMET

LME MORNING – Base metals drift lower, Fed’s rate decision looms

Date Sep 13 2015 18:06:26 Source:

The Fed’s policy board have been locked into a public debate over the correct timing of raising interest rates, which have been near zero since December 2008. In April, the Fed removed all calendar references in its forward guidance, meaning the bank is now entirely data-dependent.

Various FOMC members have turned increasingly hawkish over the past few months, with Fed chairwoman Janet Yellen expressing a desire to raise rates sometime this year.

But inflation remains below the bank’s target of two percent – the CPI has been no higher than 0.4 percent for the past two years and dipped to -0.6 percent at the start of 2015.

US data releases today include the PPI, the core PPI, preliminary UoM consumer sentiment and inflation expectations as well as Federal budget balance.

China is also proving influential this morning – its central bank has intervened in the offshore yuan after the spread between its onshore and offshore currencies widened to create arbitrage opportunities.

“In an effort to dampen speculation and stabilise local financial markets, the PBoC reportedly intervened aggressively in CNH sending a very clear message that the spread between CNH and CNY was too high,” ANZ Research said.

The PBoC has lowered the proportion of deposits that financial institutions need to set aside as reserves to enhance liquidity, the central bank said in a statement.

Earlier, Chinese M2 money supply came in as expected at 13.3 percent, while new loans disappointed at 810 billion yuan. Over the weekend, industrial production, fixed asset investment and retail sales are scheduled for release and might give more clues on the state of the Chinese economy.

In equities, the Shanghai Composite Index was last up 0.07 percent at 3,200.234.

“At the end of what was a particularly volatile week, equity returns are mixed in Asia as traders adjust their positions ahead of next week’s FOMC meeting,” Swissquote said in a note.

In the metals, copper at $5,349 was down $49 on Thursday’s close. Inventories continued to decline, falling a net 2,300 tonnes to 342,000 tonnes. Cancelled warrants were 725 tonnes lower at 63,050 tonnes.

Aluminium slipped $5 to $1,632 although stocks continued to fall, dropping 10,275 tonnes to 3,186,275 tonnes, the lowest since 2009. Cancelled warrants dropped 10,275 tonnes to 1,175,025 tonnes.

Nickel, which was Thursday’s strongest performer, fell $155 to $10,295. Stocks fell 1,710 tonnes to 447,972 tonnes taking on warrant availability to 281,952 tonnes – the lowest since October last year.

“The supply deficit that some market participants had expected already to materialize this year should finally come about next year, production cuts in particular contributing to this alongside solid demand,” Commerzbank said in a note.

“Norilsk Nickel, the world’s largest nickel producer, estimates that more than 60 percent of producers worldwide will be operating at a loss at prices of $10,000,” it added.

Zinc at $1,809 was $5 lower – stocks and cancelled warrants both fell 3,150 tonnes to 571,975 tonnes and 59,000 tonnes respectively – and lead also slipped $1,725, with stocks edging 150 tonnes lower to 168,600 tonnes.

Tin at $15,260 was down $115. Stocks dropped 85 tonnes to 5,540 tonnes while cancelled warrants fell 315 tonnes to 1,460 tonnes. Steel, cobalt and molybdenum were neglected.

LME MORNING – Base metals firm, Chinese equity rebound sparks short-covering

Date Sep 09 2015 20:31:04 Source:

A much-anticipated bout of short-covering kicked in following a recovery in equities and news earlier this week that Glencore will cut copper output by 400,000 tonnes.

Equity markets have built on their recent upmoves, most notably in China – the Shanghai Composite Index finished up 2.29 percent at 3,243.089.

“Bearish clouds in the short term appear to have abated,” a trader said.

Still, the recent moves higher should be eyed with caution because the underlying conditions remain intact, some market participants warned.

“For now we feel there is room for the rallies to continue but we would be wary of getting too bullish – further setbacks in China or further contagion from China in emerging markets might not be that far away,” FastMarkets analyst William Adams said.

“Headwinds to commodities are heavily influenced by the slowdown in China where the government has been steadfast in reforming and rebalancing the economy,” Bank of America noted. “In fact, we believe that the change in economic policies is almost as momentous… to commodity markets as the country’s entry to the WTO in 2001.”

The euro has slipped against the dollar this morning – it was last at 1.1154.

There is little market-moving data scheduled for release today – data already out of Japan showed some improvement with M2 money stock and consumer confidence rising. Later US numbers include the Jolts job data.

In the metals, copper retreated from its earlier seven-week high of $5,434 to trade at $5,388, per tonne still up $43 on Tuesday’s close. Business has been brisk, with close to 9,500 lots changing hands on Select so far. Stocks climbed a net 650 tonnes to 346,850 tonnes.

“The Glencore announcement of copper production cutbacks in Africa is also serving to naturally turn forward spreads bid,” the trader said.

Indeed, the Dec 15/Dec 16 copper spread was last at a backwardation of $16, having been in a contango of $6 at the end of last week.

Aluminium at $1,646 was $15 higher, back slightly from a multi-week high of $1,650. Stocks and cancelled warrants were both down 6,625 tonnes to 3,206,400 tonnes and 1,195,075 tonnes respectively.

Nickel at $10,060 was up $60 after stocks slipped 312 tonnes to 451,044 tonnes and cancelled warrants were 3,204 tonnes lower at 159,534 tonnes.

Zinc rose $8 to $1,821 after 2,050-tonne falls in both stocks and cancelled warrants to 551,375 tonnes and 139,500 tonnes respectively. Lead at $1,717 was $26 higher; stocks fell 1,925 tonnes to 170,325 tonnes.

Tin at $14,900 was $45 higher after finding resistance at $15,000. The backwardation in tin continued – cash/threes was last at $250. Further increases are likely should availability become more restricted, traders said.

Steel, cobalt and molybdenum were neglected. Cobalt stocks rose nine tonnes to 537 tonnes while cancelled warrants fell 10 tonnes to 34 tonnes.

Report by SHMET

LME MORNING – Base metals mixed, copper cancellations continue to rise in Asia

Date Aug 31 2015 08:41:11 Source:
Aug.31,2015(SHMET)--

Base metals were mixed in LME premarket trading on Friday, extending a week of volatile trading that started on “Black Monday”, with copper and nickel back below $5,100 and $10,000 respectively.

 

Further choppiness is likely – today is the last trading day of the month because of Monday’s bank holiday in the UK.

 

“The metals are continuing in volatile trading ranges and I expect to see much the same for end-of-month positioning. Spread tightness is a feature as shorts have covered of late,” a trader said.

 

The base metals dropped to fresh multi-year lows this week after the meltdown in Chinese equities triggered fears that the Chinese economy was slowing more than expected

 

The People Bank of China stepped in on Tuesday and again on Wednesday, announcing stimulus measures in a bid to stem the fears. As the week progressed, a return to strength for equities helped underpin metals prices.

 

Today, the Shanghai composite index closed at 3,232.349, up 4.82 percent and building on Thursday’s uptick – still, they ended the week down more than eight percent.

 

In data, the US goods trade balance, the core PCE price index, personal spending, personal income, revised UoM consumer sentiment and revised UoM inflation expectations are due.

 

In the metals, copper at $5,078 was down $62 on Thursday’s close. Around 8,000 lots have changed hands on Select so far. The recent spate of weak prices has meant that the arbitrage window between the SHFE and the LME has opened, which in turn has seen an increase of cancellations in Asia as material is moved to Shanghai.

 

Total cancelled warrants rose a net 3,900 tonnes to 56,225 tonnes, with increases predominantly in Singapore and Port Klang as well as Gwangyang and Busan.

 

In spreads, the benchmark cash/threes was last at a backwardation of $33, while there are also backwardations in the September, October and November dates. LME data continues to show there is one large warrant holder at 50-79 percent across all three reported positions. 

 

Nickel is back under $10,000, slipping $205 to $9,855. The cash/threes has seen a backwardation bid at $35. Stocks were up 474 tonnes at 255,166 tonnes and cancelled warrants increased 450 tonnes to 163,950 tonnes.

 

“Even though there are warrants in abundance, many traders are trying to get hold of material, some for consumption but many for financing purposes,” Triland noted.

 

Aluminium at $1,565 was up $5 after stock decreased 7,550 tonnes to 3,276,075 tonnes. Stocks have fallen more than 44,000 tonnes this week, a similar figure to last week.

 

Lead was down $6.50 at $1,671.50 although inventories slipped 1,725 tonnes to 187,400 tonnes while zinc at $1,779 was up $27.

 

Following yesterday’s large increase in cancellations in New Orleans, lea’s nearby spreads have tightened – cash/threes was at slight contango of $1.50. This morning, stocks and cancelled warrants were both down 2,000 tonnes at 522,875 tonnes and 149,675 tonnes respectively.

 

Tin at $13,800 was $90 lower but its spreads remain backwardated – cash/threes was last at $100. Stocks dropped 380 tonnes to 6,980 tonnes and cancelled warrants fell 350 tonnes to 2,170 tonnes.

 

Steel, cobalt and molybdenum were, neglected with no changes to stocks.

 

 

 

 

Edited by SHMET

Surging oil prices buoy precious metals

Date Aug 31 2015 08:40:56 Source:
Aug.31,2015(SHMET)--

Gold prices settled in positive territory for the first time since “Black Monday” as rebounding oil prices supported the precious metals.

 

Gold for December settlement on the Comex division of the New York Mercantile Exchange jumped $11.40 to settle at $1,134.0 per ounce. The yellow-metal fell four straight sessions before today.

 

Commodities and equities have recovered after plummeting on Monday – the term “Black Monday” became so popular it was trending in the US on Twitter, a social media application.

 

Light sweet crude (WTI) oil futures fell below $40 per barrel this week, but recovered and were last up $2.68 or 6.3 percent to $45.24 per barrel.

 

“Precious metals were dragged up in a typical Friday retracement buoyed by a resurgent oil market which has risen about 15 percent in two days,” Triland Metals said in a note.

 

Additionally, SPDR Gold trust – the world’s largest gold exchange-traded-fund – saw inflows of 1.5 tonnes yesterday, demonstrating that gold is still an attractive investment option for market participants.

 

In news,  investors will parse the language of various Fed officials during the multi-day Jackson Hole Symposium in Wyoming for any clues on the central bank’s decision whether to raise interest rates or not.

 

It should be noted that Federal Reserve Chairwoman Janet Yellen is not in attendance.

 

In US data today, Core PCE price index was in-line with estimates at a 0.1 percent increase, with personal income coming also matching expectations of 0.4 percent uptick.

 

However, personal spending rose 0.3 percent, below forecast of 0.4 percent.

 

University of Michigan consumer sentiment was at 91.9, missing the consensus of 93.2, while inflation came in at 2.9 percent, above the previous reading of 2.8 percent.

 

Turning to wider markets, UK second estimate GDP quarter-over-quarter matched consensus at 0.7 percent, while preliminary business investment quarter-over-quarter jumped 2.9 percent, above the projected 1.6 percent gain.

 

In US equities, the Dow Jones industrial average and S&P were down 0.4 percent and 0.3 percent respectively, while the dollar was 0.5 percent stronger at $1.1185 against the euro.

 

As for the other precious metals, Comex silver for September delivery increased 11.30 cents to $14.530 per ounce. Trade has ranged from $14.340 to $14.650.

 

Platinum for October delivery on the Nymex rose $15.60 to $1,021.60 per ounce, while the most-actively traded palladium contract was at $588.00 per ounce, up $20.30.

 

 

 

Edited by SHMET
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