Monthly Metal Review

Overview (November 2018)

Lack of progress on US trade talks and further US rhetoric against Europe, especially aimed at the auto imports, have made for an uneasy market. A market in which businesses and some investors are trying to stay on the sidelines, with many now winding down for the year-end, while the more speculative elements of invest-ment spectrum are shorting the metals. For now the metals’ fundamentals generally remain strong, order books are robust and for many of the metals the fundamentals look set to tighten in 2019, but the uncertainty over trade is strong headwind and one that could get worse. The fact US mid-term elections saw the Democrats regain control of the House of Representatives will have weakened President Donald Trump as the House will now be able to re-store checks and balances on his administration, but it is unlikely to have much impact on US trade policy as the President has executive power in that area. The trade disputes have dragged on for so long that the market seems numb to the news-flow, but while metal prices are either rangebound or declining, the tenden-cy has been for users to destock, or to live hand-to-mouth with low stocks. Should the trade situation suddenly improve, given President Donald Trump’s preference to announce policy via Twitter, then there is a risk that the already oversold metals mar-kets could suddenly be caught off guard and with too low a level of stocks, and in some cases with short positions. That may be a risk the metals market is happy to take as if the risk unfolds then it would lead to more buoyant times ahead. If no trade agreement is struck soon, then the prospects of even broader and more penalizing tariffs against China and other trade partners could make for a considerably more bearish economic climate for the markets, one which could trigger another round of risk off. To some extent, the already downtrodden metals prices may have discounted a further deterioration in trade relations, but equities could still correct further and that could lead to another broad-based sell-off. The European Commission reported that economic sentiment dropped in the Eurozone for the tenth consecutive month in October. US Q3 GDP held steady at 3.5%, which was below the 3.6% the market expected. Novem-ber’s Flash Purchasing Managers Manufacturing data for Japan (51.8), EU (51.5) and US (55.4), all declined, with only the US reading being a safe distance from the 50 level that distinguishes economic expansion from contraction. This supports the OECD economic outlook that says the global economy is slowing, albeit remaining strong “Global economic growth remains strong but has passed its recent peak and faces escalating risks including rising trade tensions and tightening financial conditions”. With Qatar declaring its intentions to part its ways with the OPEC, it will be interesting to see how these geopolitical issues shape the markets in future. There may not be a short term impact as Qatar contributes to only 2% of OPEC production. On the other side, Russia joining hands with OPEC to cut its oil production will lead to a stall in the falling crude prices. US treasuries 10-year yields have settled around the 3.06% level, down from 3.20% earlier in the year, despite this, the US dollar remains strong with the dollar index at 97.35, just shy of the November 12 peak at 97.70. While the diverging monetary policy paths between the US and Europe/ Japan favour a strong-er dollar, any escalation in US trade wars could start to be a drag on the US economy and that in turn might prompt the FOMC to become more dovish for a while, thereby leading to a pullback in the dollar. That said, the counter argument is that higher import prices into the US, due to tariffs, could mean a pick-up in infla-tionary pressures that would keep the FOMC hawkish. That said, the sharp drop in oil prices to $60 per barrel, from $86 in early October will have taken some of the heat out of inflation sending ripples through the global economy, lending more spending power to consumers — particularly for Americans’ big holiday shopping spree — but potentially dampening investment in US oil production. In a positive development, the LME said it will extend a trial of electronic closing prices instead of open outcry for nickel to other metals. The LME will begin a three-month trial with the benchmark three-month nickel contract in February and extend it for other metals if the program is successful. We hope this will add to the metal’s tradability in future.

Daily Prices

December 2018

Copper
Date(Fix.) ($/MT)
Average 6186.71
11-12-2018 6163
10-12-2018 6112
07-12-2018 6173
06-12-2018 6112
05-12-2018 6162
04-12-2018 6278
03-12-2018 6307
Silver
Date(Fix.) ($/OZ)
Average 14.49
11-12-2018 14.64
10-12-2018 14.53
07-12-2018 14.485
06-12-2018 14.38
05-12-2018 14.48
04-12-2018 14.545
03-12-2018 14.385
PM MEAN AM Gold
Date(Fix.) ($/OZ)
Average 1239.88
11-12-2018 1248.25
10-12-2018 1246.8
07-12-2018 1241.2
06-12-2018 1236.45
05-12-2018 1236.15
04-12-2018 1239.25
03-12-2018 1231.05
Date(Fix.) ($/OZ)
Average 1240.15
11-12-2018 1246.775
10-12-2018 1246.075
07-12-2018 1242.25
06-12-2018 1239.5
05-12-2018 1236.025
04-12-2018 1239.775
03-12-2018 1230.675
Date(Fix.) ($/OZ)
Average 1240.43
11-12-2018 1245.3
10-12-2018 1245.35
07-12-2018 1243.3
06-12-2018 1242.55
05-12-2018 1235.9
04-12-2018 1240.3
03-12-2018 1230.3
Lead
Date(Fix.) ($/MT)
Average 1967.36
11-12-2018 1969.5
10-12-2018 1975.5
07-12-2018 1965
06-12-2018 1947
05-12-2018 1976
04-12-2018 1974
03-12-2018 1964.5
Zinc
Date(Fix.) ($/MT)
Average 2696.36
11-12-2018 2675
10-12-2018 2678
07-12-2018 2709
06-12-2018 2692
05-12-2018 2705.5
04-12-2018 2740
03-12-2018 2675
Tin
Date(Fix.) ($/MT)
Average 19002.14
11-12-2018 19020
10-12-2018 18930
07-12-2018 18930
06-12-2018 18950
05-12-2018 19200
04-12-2018 19110
03-12-2018 18875
Nickel
Date(Fix.) ($/MT)
Average 10951.43
11-12-2018 10765
10-12-2018 10740
07-12-2018 10815
06-12-2018 10855
05-12-2018 11020
04-12-2018 11265
03-12-2018 11200
Cobalt
Date(Fix.) ($/MT)
Average 55250.00
11-12-2018 55250
10-12-2018 55250
07-12-2018 55250
06-12-2018 55250
05-12-2018 55250
04-12-2018 55250
03-12-2018 55250