Base metals have started the second half of the year with a whimper, returning to the lower end of recent ranges on the LME on Wednesday morning. It remains in consolidation mode, the corrections seen in May have for the most part halted for now, but rebounds are struggling to hold on to gains. “Copper needs something concrete before it can break any higher and the market is failing to provide that at present,” the broker noted.
It appears that there is both bargain hunting and selling into strength going on. On Tuesday, copper and lead ended the day lower by 0.7 and 0.4 percent respectively, aluminium was unchanged, nickel and zinc were up one percent. In the metals, copper is trading either side of $4,600 – it traded recently at $4,590 per tonne, down $81 on Tuesday’s close but off intraday lows of $4,583. (Source: https://www.fastmarkets.com/base-metals-news/aluminium/metals-morning-view-metals-back-footing-as-chinese-pmi-data-disappoints-114665/)
The base metals price continued to consolidate yesterday with average gains of 0.4 percent, but within the complex the performance was mixed with copper off 0.9 percent at $4,606, tin was down 0.6 percent and nickel was off 0.2 percent. Zinc led the advance, pushing up to a new 2016 high at $1,977, it closed up 2.3 percent at $1,968, lead and aluminium were up 0.9 percent. Precious metals pushed lower yesterday, but gold and silver closed little changed with gold prices at $1,215.20 and the PGMs were off around 0.5 percent. (Source:https://www.fastmarkets.com/base-metals-news/aluminium/metals-morning-view-metals-mixed-but-zinc-is-leading-advance-party-114743/)
On Thursday 2nd June 2016, the base metals remain mixed, zinc is up one percent at $1,987, lead is up 0.6 percent, and aluminium is up 0.2 percent, while copper, nickel and tin are all off slightly with copper at $4,600. Volume has been above average with 6,054 lots traded as of 05:47 BST. In India the copper price In Mumbai on 01st June 2016 was INR 310.45. The road seems to be a real bumpy one.
In Shanghai, the base metals are for the most part stronger, led by a 3.3 percent gain in zinc, aluminium is up 0.9 percent, lead is up 0.7 percent and tin is up 0.1 percent, while copper bucks the trend with a 0.6 percent decline to Rmb 35,250. Spot copper in Changjiang is up 0.1 percent at Rmb 35,350 - 35,550. The spread with the futures is at an equivalent of $45 per tonnes back and the LME /Shanghai copper arb ratio is at 7.66. In other metals in China, iron ore prices were last around $50.15; steel rebar is off 2.4 percent. (Source: https://www.fastmarkets.com/base-metals-news/aluminium/metals-morning-view-metals-mixed-but-zinc-is-leading-advance-party-114743/)
The metals are starting on a back-footing, which all seems part of the consolidation after the recent price weakness and given June is going to be a nervous time for the financial markets with the FOMC meeting and Brexit vote, we should expect volatility. Some metals are looking stronger than others – copper, nickel and lead are looking the more vulnerable ones, aluminium and tin are in mid-ground, while zinc is looking the one most eager to head higher.
The base metals are quite diverse with the market bullish for zinc – aluminium and lead are now following, while tin has rebounded off its spike low, nickel is consolidating and copper is struggling to hold on to the rebound gains seen last week. Our overall view is that the weakness in May was generally a correction to the bull markets seen in January-to May and that after consolidation prices would resume their upward trend, or at least hold up in relatively high ground. Some of the metals are following that path, other have yet too.
With a lot of important data to be out on Friday trading may well remain choppy. Macroeconomic data continues to show a mixed backdrop, with improving data from the US and Japan prompting upgraded growth forecasts. For now, all but all remain vulnerable, but we expect dips to attract pent-up demand.