Forecasts and market analysis based on price assessments from Fastmarkets MB and Fastmarkets AMM

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March 2019 | Base Metals

Unchanged to slightly higher this morning

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Three-month base metals prices on the London Metal Exchange were for the most part firmer this morning, Tuesday March 19, the exceptions were lead and tin that were little changed, while the rest were up by an average of 0.5%, with copper prices up by 0.4% at $6,462 per tonne, compared with $6,433 per tonne at Monday’s close.  

Volume was average, with 6,236 lots traded on LME Select as at 6.51am London time, compared with 6,328 lots at a similar time on Monday. 

Spot precious metals prices were up across the board for the second day running, up by an average of 0.5% on Tuesday, with platinum up by 0.6%, silver prices up by 0.2%, palladium up by 0.8%, and gold prices up by 0.2% at $1,305.50 per oz, compared with $1,303.40 per oz at Monday’s close. Palladium prices have set a fresh record high at $1,594.50 per oz. 

In China, base metals prices on the Shanghai Futures Exchange were mixed with May nickel (+1.1%) and April lead (-1.1%) polarised, while May aluminium was up by 0.9%, May zinc is up by 0.1% and May copper was up by 0.2% at 49,270 yuan ($7,331) per tonne, compared with 49,180 per tonne at Monday’s close. May tin was off by 0.1%. The spot copper price in Changjiang was off by 0.1% at 49,890-50,190 yuan per tonne this morning from 49,935-50,235 yuan per tonne on Monday, while the London/Shanghai copper arbitrage ratio was little changed at 7.62. 

In other metals in China, the May iron ore contract on the Dalian Commodity Exchange was up by 0.2% at 636 yuan per tonne from 634.50 yuan per tonne at the close on Monday. On the SHFE, the May steel rebar contract was up by 0.3% at 3,787 yuan per tonne compared with 3,776 yuan per tonne at Monday’s close. 

In wider markets, the spot Brent crude oil price was 0.18% stronger at $67.72 per barrel from $67.60 per barrel at the close on Monday. 

The yield on US 10-year treasuries was little changed this morning - it was recently quoted at 2.5932% from 2.5943% at a similar time on Monday. The yields on the US 2-year and 5-year treasuries remain inverted - they were recently quoted at 2.4448% and 2.4026% respectively. The German 10-year bund yield was weaker at 0.0750% after 0.0900% at a similar time on Monday morning. 

Asian equity markets were for the most little changed on Tuesday: Nikkei (-0.08%), Hang Seng (+0.04%), the Kospi (-0.09%) and the ASX 200 (-0.09%), while the CSI 300 was off by 0.46%. This follows a firmer performance in western markets on Monday: in the United States, the Dow Jones Industrial Average closed up by 0.25% at 25,914.10; and in Europe, the Euro Stoxx 50 was up by 0.05% at 3,387.94. 

The dollar index is on a back footing, it was recently quoted at 96.40, compared with 96.44 at a similar time on Monday, but is near recent lows at 96.37. The dollar seems to be anticipating a more dovish Federal Reserve stance when the Federal Open Market Committee (FOMC) meets on Wednesday. The other major currencies we follow are for the most part little changed, but have a slight upside bias: the euro (1.1351), the Australian dollar (0.7097), sterling (1.3273) and the yen (111.26). The yuan is flat - it was recently quoted at 6.7157 compared with 6.7122 at a similar time on Monday. Most of the other emerging market currencies we follow are flat-to-firmer, suggesting little stress in their markets. 

Economic data out today includes Italy’s trade balance, data on UK employment, German and EU Zentrum fur Europaische Wirtschaftsforschung (ZEW) data and US factory orders. 

The metals are for the most part consolidating below recent highs and are generally holding up well, with aluminium challenging this year’s highs at $1,936 per tonne seen in February. Lead prices looking the weakest and the recent re-warranting of cancelled warrants is behind that. Overall, the metals seem to be waiting for fresh direction from US/China trade talks. 

Gold, silver and platinum prices have become quite choppy as they consolidate, but seem to be supported by a dollar that looks set to weaken further and the catalyst for that may be Wednesday’s FOMC meeting. Palladium prices remain strong in line with their fundamentals.

William Adams