BASE & PRECIOUS METALS - European Morning View - Industrial metals drift lower,while gold holds steady

By: William Adams

London 19/02/2013 - Base metals were downbeat on Monday, disappointed that China did not come back into the market looking more bullish. By the close the base metals were down an average of 1.5 percent with nickel off more than 2 percent and copper closing off 1.4 percent at $8,125. Although we feel that producer pricing is likely to add downward pressure in the absence of fresh buying, we need to be wary in case the lack of buying from China on Monday, was just a lull. If Chinese buying/restocking does not emerge in the next few days then we would not be surprised if a more pronounced sell-off got underway.

Precious metals were mixed, bullion consolidated after Friday’s mauling, we still feel these weaker price levels are likely to prompt bargain hunting from the trade and those looking to diversify away from fiat currencies, while the PGMs climbed on the back of further unrest in Rustenburg.

This morning the base metals are off an average of 0.5 percent, tin leads the declines with a 1 percent drop to $24,327, nickel is off 0.9 percent at $17,780, while copper is down 0.2 percent at $8,111.25. Volumes have been average with 6,470 lots traded.

Precious metals are off an average of 0.2 percent with gold down 0.1 percent at $1,613.20, silver is unchanged at $30.05, while the PGMs are off around 0.4 percent.

In Shanghai the base metals are down an average of 0.4 percent, aluminium is off 0.8 percent at Rmb 15,090, copper is off 0.6 percent at Rmb 58,840, lead is down 0.4 percent at Rmb 15,415 and zinc unchanged at Rmb 15,815. Rebar is up 0.1 percent at Rmb 4,095, while gold is up 0.3 percent at Rmb 328.75/g.

Spot copper in Changjiang is down 0.4 percent at Rmb 58,350-58,520, which puts the contango with the futures at around an equivalent of $50/tonne, while the LME/Shanghai copper arb remains closed with the ratio at 7.26.

Equities – the Euro Stoxx 50 and Dow closed with minimal gains yesterday, but the mood in Asia has been downbeat with the Nikkei off 0.3 percent, the Hang Seng is off 0.8 percent, the MSCI Asia Apex is off 0.2 percent and China’s CSI 300 is down 1.9 percent. The latter is off on concerns the government may issue further measures to rein in property price rises.

Currencies – the dollar remains upbeat with the dollar index at 80.62, while currencies are mixed with the euro treading water around 1.3343, the pound has caught the attention of the funds who have been shorting it, it is last at 1.5483, the aussie is firmer at 1.0325, as is the yen at 93.50 after yesterday’s high at 94.21 (there may be a potential intermediate double bottom forming on the yen), while the yuan is last at 6.2436.

The economic calendar has some important data on it today with ZEW economic sentiment for Germany and the EU and in the US we get insight into the housing market with the NAHB housing market index – see table attached more details.

Our view for the base metals is that we feel top-of range selling may out-gun the fund buying that has been evident of late and that could lead to a pull back in prices. For the precious metals we remain upbeat we expect bargain hunting in bullion and feel the unrest in South Africa will continue to support PGM prices, although it is interesting that yesterday’s trouble at Rustenburg has only had a temporary impact, which suggests there is some profit-taking around.

 

Metals Overnight Performance
GMT7:02 AM+/-+/- %Lots
Cu8111.25-14-0.2%3221
Al2117-6-0.3%1176
Ni17780-160-0.9%461
Zn2149-6-0.3%984
Pb2385-14.5-0.6%610
Sn24327-243-1.0%18
Steel 33000.0%Total lots
 Average (BM ex-Steel)-0.5%6470
Gold1613.21-0.89-0.1% 
Silver30.0500.0% 
Platinum1684.5-8.5-0.5% 
Palladium758.5-2.5-0.3% 
 Average PM-0.2% 

 

Economic Agenda
GMTCountryDataACTUALExpectedPrevious
10:00am
EU German ZEW Economic Sentiment35.3031.50
10:00amEU ZEW Economic Sentiment 35.531.2
3:00pmUS NAHB Housing Market Index 4847
11:50pmJapanTrade Balance -0.59T-0.80T
 
 
 
 
 
 

 

 

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