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LME - 26 October 2013

The markets, and the metal markets, got a boost from better than expected Chinese third quarter economic data. And in the US, the Republicans finally conceded at the last minute, allowing the government to restart and avoiding the risk of sovereign default.

China’s gross domestic product rose by 7.8% during the third quarter of this year, compared with July/September of last year.  This was the best performance seen this year.  Growth is now expected to slow down a little in the fourth quarter, but the rise in GDP in the first nine months was 7.7%, and this should be enough to allow the Chinese economy to reach the target of 7.5% for the year set by the government.

At the same time, China’s industrial production grew by 10.2% year-on-year in September, slightly below the August figure of 10.4%.

The markets had more or less expected the US to avoid default, so the reaction to the resolution of the problem was muted.  Nevertheless, the shutdown of government during just over two weeks might have a modest impact on economic recovery – even if the latest issue of the Beige Book (the Fed’s anecdotal report on the US economy) showed moderate or modest growth during the early part of the shutdown.  The upside of this hesitation for the markets is that it might mean that the Fed (the US central bank) may start “tapering” its quantitative easing programme a little later than it would have otherwise.

The US payrolls data for September that has been delayed by the government shutdown was finally published earlier this week. It showed the American economy creating 148,000 jobs last month, against expectation of 180,000, and 169,000 created in August. Unemployment in the US remained at around 7.2%.

Aluminium producer Alcoa has blamed the London Metal Exchange (LME) for excessive queues at LME-registered warehouses, according to the Financial Times. A letter seen by the paper from Alcoa to the Financial Conduct Authority accused the LME of “exceeding the proper authority of an exchange”.

In Japan, central bank governor Haruhiko Kuroda claimed that the government’s economic strategy was working as the country’s seasonally adjusted trade deficit came in at close to expectations at Y1,091bn (£6.87bn) in September, and inflation was close to its 2% target.  The markets were slightly disappointed, however, as both exports (up by 11.5% in September against hopes of a 15.6% rise) and imports (up by 16.5% against forecasts of 19.9%) were below expectations.

In details

On the London Metal Exchange, aluminium for delivery in three months eased to around $1,853 per tonne earlier this week, up from $1,874 a week earlier. Stocks of aluminium in warehouses approved by the exchange rose to 5,407,525 tonnes earlier this week from 5,321,450 tonnes a week earlier.

Three month aluminium alloy moved back to $1,835 per tonne earlier this week from $1,840 a week earlier.  LME stocks slipped to 61,200 tonnes earlier this week, from 61,500 tonnes a week earlier.

Three month copper rose to $7,250 per tonne earlier this week, from $7,223 a week earlier.  LME stocks fell to 494,850 tonnes earlier this week from 508,575 tonnes a week earlier. Recent figures showed rising imports of refined copper into China.

Three month lead was quoted at around $2,184 per tonne earlier this week, up from $2,128 a week earlier.  LME stocks slipped to 232,828 tonnes earlier this week, from 235,675 tonnes a week earlier.

Three month nickel was trading at $14,350 per tonne earlier this week, up from $14,010 a week earlier.  LME stocks edged up to 230,760 tonnes earlier this week, from 228,186 tonnes a week earlier.

Three month tin was holding at around $22,950 per tonne earlier this week, down from $23,475 a week earlier.  LME stocks recovered to 13,010 tonnes earlier this week, from 12,780 tonnes a week earlier.

Three month zinc edged up to around $1,942 per tonne earlier this week, from $1,927 a week earlier.  LME stocks rose to 1,055,775 tonnes earlier this week from 990,225 tonnes a week earlier.

Steel billet’s three month position moved up to around $235 per tonne earlier this week, from $230 a week earlier. LME stocks fell to 17,875 tonnes earlier this week, from 21,970 tonnes a week earlier.

Precious metals perked up at the prospect of quantitative easing lasting a little longer.  Spot gold bullion was trading at around $1,312.40 per ounce earlier this week, up from $1,272.00 a week earlier.  Spot silver rose to $22.13 per ounce earlier this week from $21.24 a week earlier, and spot platinum stood at $1,432 per ounce, up from $1,379 a week earlier.

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