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LME round-up 1 March

Metal markets were unsure which way to turn this week, because they were not sure what the US economy was doing. Prices were little changed on the week.

Recent data has been promising. The index of leading indicators, published by the trade association Conference Board, rose by 0.3% in January, following no change in December, and a 0.9% rise in November. The preliminary purchasing managers’ index (PMI) for manufacturing in the US in February, compiled by Markit Economics, rose to 56.7 (up from 53.7 in January), its highest level for almost four years.

But earlier data was less good, and much of that had been dismissed as being due to the bad weather that much of the country had suffered.  A few market players were wondering whether too much was being made of the snow and freezing temperatures.

Also, business conditions were deteriorating in China, where the preliminary manufacturing PMI slipped to a seven-month low of 48.3 in February from 49.5 in January.  In addition, Chinese banks were reported to have cut back lending for property purchase, and house prices in some Chinese cities were rising more slowly.  This, too, hurt sentiment in the metal markets.

In contrast to the US, Europe has had relatively mild weather – important floods in some parts notwithstanding – which may have contributed to improved economic data.  The preliminary manufacturing PMI for the eurozone compiled by Markit stood at 53.0 in February, admittedly down from 54.0 in January, but still well into positive territory.  In addition new orders for the zone’s manufacturers rose for the seventh consecutive month.

Growth in Germany’s gross domestic product was reported to have risen by 0.4% in the final quarter of last year, but observers were concerned that the growth had come from net exports, as domestic demand fell by 0.7% during this period.  It is not unusual for Germany to rely on exports, but that does tend to make the recovery fragile.

Another concern for the markets is the risk of deflation in the eurozone.  European Central Bank president Mario Draghi has has said that deflation is not a threat at the moment, but some of his colleagues have noted that the Bank does see very low inflation in the medium term.

In detail

On the London Metal Exchange, aluminium for delivery in three months edged down to around $1,742 per tonne earlier this week from $1,746 a week earlier. Stocks of aluminium in warehouses approved by the exchange eased to 5,338,700 tonnes earlier this week from 5,362,175 a week earlier.  Meanwhile, there have been reports of the Russian state perhaps organising the stockpiling of 1 million tonnes of aluminium at Rusal, which would tighten supplies, if true.

Three month aluminium alloy rose to $1,840 per tonne earlier this week, from $1,820 a week earlier.  LME stocks eased to 54,780 tonnes earlier this week, from 54,980 a week earlier.

Three month copper was trading at around $7,062 per tonne earlier this week, down from $7,174 a week earlier.  LME stocks dipped to 282,475 tonnes from 296,025 tonnes a week earlier.  Meanwhile, Freeport McMoRan was reported to be negotiating with the Indonesian authorities about copper concentrate exports, pending a feasibility study for a smelter.

Three month lead eased to around $2,121 per tonne earlier this week, from $2,150 a week earlier, while LME stocks eased to 201,350 tonnes from 203,425 a week earlier.

Three month nickel was holding at around $14,200 per tonne earlier this week, down from $14,395 a week earlier.  LME stocks eased to 268,152 tonnes earlier this week, from 268,800 tonnes a week earlier.

Three month tin slipped to $23,095 per tonne earlier this week from $23,155 a week earlier.  LME stocks fell to 8,375 tonnes earlier this week, from 8,745 a week earlier.

Three month zinc stood at around $2,033 per tonne earlier this week, down from $2,061 a week earlier.  LME stocks fell to 779,050 tonnes earlier this week from 799,800 tonnes a week earlier.

Steel billet’s three month position held at $370 per tonne earlier this week, unchanged from a week earlier. LME stocks were also unchanged at 14,430 tonnes.

Precious metals were steady given the relative weakness of the dollar.  Spot gold bullion edged up to around $1,335.50 per ounce earlier this week, up from $1,320.00 a week earlier.  Spot silver climbed to $21.85 per ounce from $21.63, while spot platinum rose to $1,438 per ounce from $1,428.

 

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