Metal prices steadied as US data suggested a recovering economy, and even the eurozone’s performance was less weak than of late
The final index for consumer sentiment in the US in May, compiled by the University of Michigan, came in at 84.5. This was up from a preliminary figure of 83.7, and well up from the final figure for April which was 76.4. It was also the best showing since July 2007.
Also, the purchasing managers’ index (PMI) for US manufacturing, compiled by the trade association Institute for Supply Management, stood at 49.0 for May, down from 50.7 in April. While this meant that manufacturing contracted in May, the association noted that generally, over a period of time, a PMI in excess of 42.2 pointed to overall economic growth.
Economic growth in the US is generally a good thing for the commodity markets, but the matter is delicate currently. A number of investors fear that US recovery will persuade the Federal Reserve (the US central bank) to rein in quantitative easing (the money that it is pouring into the US money markets), causing the liquidity that is fuelling commodity purchases to dry up.
For the eurozone the final figure for the manufacturing PMI for May compiled by Markit Economics was 48.3, up from a preliminary value of 47.8. This was the best (as in least bad) performance for 15 months. In the UK, the PMI from the same source is reported to have risen from 50.2 in April to a 14-month high of 51.3.
The news from China was sufficiently mixed to be neutral. The official PMI for manufacturing, published by the National Bureau of Statistics and the China Federation of Logistics and Purchasing, increased to 50.8 in May from 50.6 in April. In contrast, the manufacturing PMI for China published by the bank HSBC in collaboration with Markit Economics fell to 49.2 in May from 50.4 in April. Analysts noted that the official figure was biased towards large companies while the HSBC figure concentrated more on small companies, so the difference reflected the fact that smaller companies faced more difficulties with demand and/or access to credit than large ones. Indeed, a sub-index of the official figure covering smaller firms was also down, they added.
Freeport McMoRan’s Grasberg mine in West Papua in Indonesia has restated after a tunnel collapse, but now faces an investigation that will involve halting operations. There were also suggestions that China’s State Reserve Bureau (strategic stockpile manager) was interested in buying around 250,000 tonnes of copper.
The next figure that the markets are looking out for is the non-farm payroll (permanent job creation), due at the end of this week.
On the London Metal Exchange, copper for delivery in three months was up to around $7,365 per tonne earlier this week, from $7,300 a week earlier. Stocks of copper in warehouses approved by the exchange eased further to 617,225 tonnes earlier this week from 619,650 tonnes a week earlier.
Three month aluminium was trading at around $1,920 per tonne earlier this week, up from $1,844 a week earlier. LME stocks eased a little, falling to 5,198,375 tonnes earlier this week, from 5,213,050 tonnes a week earlier.
Three month aluminium alloy stood at around $1,840 per tonne earlier this week, up from $1,810 a week earlier. LME stocks moved down to 69,060 tonnes earlier this week, from 70,300 tonnes a week earlier.
Three month nickel climbed to around $15,130 per tonne earlier this week, from $14,860 a week earlier. LME stocks eased to 180,072 tonnes earlier this week, from 197,370 tonnes a week earlier. There were also reports of China’s SRB buying nickel.
Three month zinc had risen to around $1,941 per tonne earlier this week, from $1,857 a week earlier. LME stocks stood at 1,086,350 tonnes earlier this week, down from 1,095,600 tonnes a week earlier.
Three month lead was up at around $2,208 per tonne earlier this week, from $2,099 a week earlier. LME stocks stood at 217,000 tonnes earlier this week, down from 230,725 tonnes a week earlier.
Three month tin was trading at around $21,050 per tonne earlier this week, down slightly from $21,155 a week earlier. LME stocks edged up to 13,910 tonnes earlier this week from 13,895 tonnes a week earlier.
Steel billet’s three month position recovered to around $170 per tonne earlier this week, from $140 a week earlier. LME stocks remained at 76,700 tonnes earlier this week unchanged from a week earlier.
Precious metals recovered some ground despite the uncertainties concerning US monetary policy. Spot gold bullion was trading at around $1,406.90 per ounce earlier this week, up from $1,387.30 a week earlier. Spot silver recovered to $22.67 per ounce from $22.39 a week earlier. Spot platinum rose to $1,493 per ounce earlier this week, from $1,467 a week earlier.