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April 2021 | Base Metals


Copper shoots higher, at fresh highs for the year; broader markets buoyed by strong data

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Copper led the London Metal Exchange base metals higher this morning, Monday April 26, and most of the base metals on the Shanghai Futures Exchange were up too, while the market continued to benefit from the strong purchasing managers’ index (PMI) data that was out on Friday.

US markets managed to shake-off concerns about US President Joe Biden’s tax plans.

Base metals
LME three-month base metals prices were up by an average of 0.8% this morning, with copper up by 1.2% at $9,663.50 per tonne, the highest it has been since August 2011, and the market now focused on the record highs of $10,190 per tonne from February 2011. Lead ($2,061.50 per tonne) was up the least with a 0.2% price gain

Volume on the LME was strong with 9,192 lots traded as of 6.12am London time, compared with an average across last week of 4,040 lots at a similar time.

The most-active base metals contracts on the SHFE were mainly stronger, the exception was June lead that was down by 0.2%, while the rest were up by an average of 1.9%. June copper was up by 2.2% at 70,840 yuan ($10,904) per tonne, with June nickel in the driving seat again with a 2.7% gain.

Precious metals
The precious metals were also up across the board, up by an average of 0.6%, with spot gold ($1,782.74 per oz) up by 0.3% and silver ($26.08 per oz) up by 0.4%. Platinum ($1,237.10 per oz) was up by 1% and palladium (2,874.50 per oz) was up by 0.8%.

Wider markets
The yield on US 10-year treasuries was stronger this morning and was recently quoted at 1.57%, this after 1.53% at a similar time on Friday.

Asian-Pacific equities were mixed on Monday: the Hang Seng (-0.2%), the ASX 200 (-0.15%), the CSI 300 (-0.47%), while the Nikkei (+0.43%) and the Kospi (+0.30%), were firmer.

Currencies
The US Dollar Index was weaker this morning and was recently quoted at 90.74, this after 91.21 at a similar time on Friday. The previous low had been at 90.85.

With the dollar weaker, the other major currencies were firmer this morning: the euro (1.2110), the Australian dollar (0.7769), sterling (1.3896) and the yen (107.78).

Key data
Key economic data already out on Monday showed Japan’s services producer price index (PPI) climbed by 0.7% year on year in March, after being flat in February. This was the first rise since October last year.

Later there is data on Germany’s Ifo business climate, US durable goods orders and Chinese leading indicators.

Today’s key themes and views
Copper looked like it was braced to push higher and it has now done this on the back of the constructive PMI data that was released on Friday and while the dollar has weakened further. Aluminium has been in the driving seat in recent months and it too continues to push the envelope on the upside, so we now wait to see if zinc, lead and tin can do the same. Nickel, which has been the weakest of the metals of late and because it has a volatile reputation, may well look attractive as a metal that has potential to catch-up.

Wall Street seemed to be able to shake-off concerns over Biden’s tax changes on Friday, but there is a risk that when the details are seen and signed off by Congress the market has another reaction. We still see the main risk to the metals’ bull market is if equities correct lower.

With other markets looking stronger again, gold’s recent show of strength is consolidating and silver is following gold. Platinum is still stuck sideways, while palladium continues to push ahead.