MORNING SNAPSHOT: Base Metals Prices Mixed, Showing Some Divergence
Base metals prices on the London Metal Exchange and Shanghai Futures Exchange were mixed this morning, Friday July 2, and appeared to be quite divergent.
LME three-month copper ($ 9,314 per tonne) and aluminum ($ 2,516 per tonne) were up 0.5% and 0.3% respectively, while the rest were down 0.3 % on average, driven by a 0.7% drop in nickel ($ 17,970 per tonne). tonne).
In recent days, metals have been quite polarized, with lead setting new highs for the year at $ 2,344 per tonne, aluminum and tin have defied recent highs, while attempts to recover copper appear shy with prices that remain high. Extreme heat in parts of North America may well be what drove lead prices up, especially following the extremely cold weather in late February. Large variations in temperature will have damaged the lead-acid batteries, increasing the demand for replacement batteries.
The most active SHFE base metals contracts were mostly weaker, with August aluminum, the metal reversing the trend with a gain of 0.3%, while the rest were down 0.8 % on average, with August copper down 0.7% to 68,220 yuan ($ 10,545) per tonne. Shanghai’s weakness follows a day of general decline on the LME on Thursday.
Spot precious metals were firmer overall, the main driver being platinum which rose 0.9% to $ 1,094.50 per tonne, while the rest increased an average of 0.2% , gold up 0.1% to $ 1,778.62 an ounce.
The yield on 10-year US Treasuries remains below the 1.50% level, it was at 1.46% this morning, against 1.53% at the same time on Monday.
Asia-Pacific stocks were mixed on Friday: the Nikkei (+ 0.23%), ASX 200 (+ 0.44%), Kospi (+ 0.04%), Hang Seng (-1, 62%) and the CSI 300 (-2.49%).
The US dollar index continues to climb. It was at 92.59 Friday morning, against 91.85 Monday at the same time.
The major currencies remained in decline this morning: the Australian dollar (0.74642), the euro (1.1840), the British pound (1.3762) and the Japanese yen (111.59).
Friday’s data will focus on the monthly US employment report, but before that there is key data on the development of Spanish unemployment, the European Union’s producer price index, and then later this afternoon US data on trade balance and factory orders.
In addition, the President of the European Central Bank, Christine Lagarde, is due to speak and there is a meeting of the Organization of the Petroleum Exporting Countries and the Joint Ministerial Follow-up Committee.
Key Friday Themes and Perspectives
Base metals look rather mixed, suggesting that each metal is trading on its own fundamentals, aluminum, tin and lead are holding up well and are approaching recent highs. At the same time, nickel, zinc and copper are consolidating even further from this year’s highs with copper looking vulnerable. Given the stronger dollar, it’s understandable that metals are generally down.
Gold prices have consolidated after the sharp drop in mid-June; prices slumped lower on Tuesday, but recovered and consolidate again – although they still appear vulnerable. The stronger dollar and record-setting US stock indices are headwinds for gold, but weaker US Treasury yields should be supportive.