Market and product
Macro woes continue to weigh, metal prices mixed
Data put from Japan and China this morning showed poorer macro indicators- Japan’s national and Tokyo core CPI both came in lower than expected at 3.1 percent and 2.6 percent, while the Chinese’s Conference Board leading index came in lower at 0.7 percent versus last month’s 1.2 percent.
““The monthly growth in the Leading Economic Index for China slowed markedly in August as real estate activity weakened and consumer expectations fell again,” said Andrew Polk, resident economist at The Conference Board China Centre in Beijing.
“Meanwhile, growth in current economic conditions, as measured by the coincident economic index, was unchanged as a contraction in production output offset growing retail sales. Targeted policy measures may provide some support in Q4, but the LEI does not point to a sustained pick up in the economy any time soon.”
Disappointing numbers from the US overnight also pressured the metals lower initially- US core durable goods were as expected at 0.7 percent but durable goods orders came in lower at -18.2 percent.
The durable goods number is at “a level not seen since the start of the new millennia. Although this level appears drastic at first and is likely to cause a knee jerk reaction to the downside in the base metals and to the upside in precious, it must be remembered that this is probably due to normalisation in the index, following the strong surge last month to 22.6 percent on the back of large orders from the aero industry,” research analyst Tom Moore from FastMarkets said.
In the metals, the copper price traded higher after closing below $6,700 on Thursday. The red meal was last seen at $6,730 per tonne %35 higher than yesterday’s close.
Aluminium gained $7 at a price of $1,957, with cancelled warrants on Thursday posting a notable increase of 109,950 tonnes to 2,566,125 tonnes - due to a wave of freshly cancelled material in Detroit. Stocks, however, were 6,850 tonnes lower at 4,637,375 tonnes.
The queue to take delivery of aluminium in Detroit has lengthened to almost two years after an increase in cancelled warrants totalling 117,450 tonnes since the beginning of September, according to FastMarkets in-house calculations.
“On the fundamental side, Chinese smelters have restarted some of their plants to tap into this year’s rally as the metal rose 10 percent so far. Profitability in the industry has changed dramatically and most smelters saw their cash flow turning positive. This will cut down expectations of a global deficit,” said a note from RDM Triland Metals.
Nickel traded lower at $17,250, a loss of $75 in price overnight. Zinc was $9 higher at $2,275, while sister metal lead at $2,071 was $2 lower with no changes to stocks. Tin dropped to fresh one-year low at $20,643 from $20,750 yesterday – the lowest since August 2, 2013.
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