Monthly Metal Review

Overview (December 2018)

Tensions in financial markets are running high as the lack of progress on US trade talks and a US Federal Reserve that is still tightening monetary policy, are unnerving investors and busi-nesses alike. Even the US markets, which has seen strong growth this year, are now under pressure with the S&P 500 on course to see its largest quarterly fall since the financial crisis – the index is down 15 percent from the end of September highs. Equities in Europe and Asia have also seen widespread corrections. Year-to-date, the Euro Stoxx 50 is down 15 percent, the Nikkei is down 11 percent and China’s CSI 300 is off 25%. The metals prices have not followed the other markets lower recently, but that is because the metals have already weakened, with prices down an average of 28.5 percent at the lows seen in the second half, com-pared with the highs seen in the first half. The concern now is that the down turn in economic activity gains too much momen-tum before a new trade deal is worked out. At the G20 meeting in early December, Chinese President Xi Jinping and US President Donald Trump called a 90 day trade truce, but while that gave the markets a boost, it was short-lived as traders seems nervous that any signs of progress could easily be undone by a tweet from Trump. As such, it seems likely the market will want a signed deal before it puts the trade war behind it. If the US and China can come up with a new deal, then we would expect confidence in the downstream supply chain to pick-up and for restocking to follow. In November, China’s imports from the US were 25 percent lower than a year earlier, although this has meant China is trying to boost imports from other regions, but it will take time for other regions to build up extra capacity. The other measures taken by China to ease the impact of the trade war are also likely to take time to take effect, so it could be than once a new trade deal is signed, Chinese growth rebounds strongly as trade resumes and fiscal stimulus kicks-in. Until a trade deal is struck, the current situation looks gloomy with purchasing managers indices (PMI) falling, the JP Morgan Global Manufacturing PMI was at 52 in November, unchanged from October’s level, but still the lowest it had been for 23 months. The bulk of third quarter GDP annualised data has been weak too: Japan (-0.6%), EU (0.2%), German (-0.2%) and China (6.5%), with US GDP falling to 3.4% from 4% in the second quarter. One indicator of financial stress is the US treasury market, the 10-year yield has fallen to 2.75 percent, this despite the December 25 basis point interest rise. Earlier in the year the yield had been at 3.2 percent, which shows investors are prepared to take a lower yield to benefit from the safety a treasury bond provides. In addition, the US treasury two and five year yields have inverted, meaning the two year yield is higher than the five-year yield, which tends to be a precursor to a recession. Likewise, gold prices have been trending higher, reaching $1,266.70 per oz on December 20, up from August’s low of $1,160.30 per oz, which is another sign that investors are parking their money in safe-havens as they sell higher risk assets. The interest differential between the US and other major currencies is keeping the dollar index in high ground, it was recently quoted at 96.50, but it has been fairly flat since the start of November, this despite the US interest rate rise. Sterling has been particularly weak on the back of the Brexit negotiations fiasco, dropping to a low of 1.2477, the lowest since April 2017, the Euro at 1.1400 is off the lows seen in November, but the EUs standoff with Italy over its budget is likely to cap the upside on the euro, while the yen at 110.90 is strengthening and seems to have regained its status as a safe-haven. With Trump shutting down the federal government it does look as though there is no end of issues that could keep markets nervous. All in all, the base metals prices are range bound in low ground waiting for more direction from trade talks. However, not everything looks gloomy in the short term. The falling crude oil price since October 2018 has helped reduce the import bills of major emerging economies. Many trade ana-lysts expect the USD to remain at current levels which should bring some respite to the developing countries that were already caught in the midst of the US-China trade war. In short, how the trade-war is played by the US and the extent of slowdown in the Chinese economy during next few months will be major drivers in deciding the direction that the world will take in 2019.

Daily Prices

February 2019

Copper
Date(Fix.) ($/MT)
Average 6166.67
18-02-2019 6269.5
15-02-2019 6190
14-02-2019 6178.5
13-02-2019 6120
12-02-2019 6102
11-02-2019 6148
08-02-2019 6207
07-02-2019 6227
06-02-2019 6210
05-02-2019 6174
04-02-2019 6076.5
01-02-2019 6097.5
Silver
Date(Fix.) ($/OZ)
Average 15.76
18-02-2019 15.765
15-02-2019 15.675
14-02-2019 15.58
13-02-2019 15.695
12-02-2019 15.81
11-02-2019 15.705
08-02-2019 15.78
07-02-2019 15.71
06-02-2019 15.73
05-02-2019 15.865
04-02-2019 15.745
01-02-2019 16.01
PM MEAN AM Gold
Date(Fix.) ($/OZ)
Average 1312.83
18-02-2019 1323.95
15-02-2019 1318
14-02-2019 1305.65
13-02-2019 1311.15
12-02-2019 1311.6
11-02-2019 1306.75
08-02-2019 1311.1
07-02-2019 1306.6
06-02-2019 1313.35
05-02-2019 1314
04-02-2019 1311
01-02-2019 1320.75
Date(Fix.) ($/OZ)
Average 1313.29
18-02-2019 1324.725
15-02-2019 1317.275
14-02-2019 1308.55
13-02-2019 1311.975
12-02-2019 1310.8
11-02-2019 1306.575
08-02-2019 1312.975
07-02-2019 1308.3
06-02-2019 1312.875
05-02-2019 1314.1
04-02-2019 1311.575
01-02-2019 1319.725
Date(Fix.) ($/OZ)
Average 1313.75
18-02-2019 1325.5
15-02-2019 1316.55
14-02-2019 1311.45
13-02-2019 1312.8
12-02-2019 1310
11-02-2019 1306.4
08-02-2019 1314.85
07-02-2019 1310
06-02-2019 1312.4
05-02-2019 1314.2
04-02-2019 1312.15
01-02-2019 1318.7
Lead
Date(Fix.) ($/MT)
Average 2058.92
18-02-2019 2029
15-02-2019 2068
14-02-2019 2033.5
13-02-2019 2002
12-02-2019 2032
11-02-2019 2050.5
08-02-2019 2066
07-02-2019 2066
06-02-2019 2080
05-02-2019 2091
04-02-2019 2096
01-02-2019 2093
Zinc
Date(Fix.) ($/MT)
Average 2684.46
18-02-2019 2632
15-02-2019 2641
14-02-2019 2635
13-02-2019 2603.5
12-02-2019 2640
11-02-2019 2648
08-02-2019 2688.5
07-02-2019 2719
06-02-2019 2719
05-02-2019 2770
04-02-2019 2785
01-02-2019 2732.5
Tin
Date(Fix.) ($/MT)
Average 21049.58
18-02-2019 21275
15-02-2019 21085
14-02-2019 21095
13-02-2019 21200
12-02-2019 21050
11-02-2019 21100
08-02-2019 21050
07-02-2019 21100
06-02-2019 20900
05-02-2019 20975
04-02-2019 20935
01-02-2019 20830
Nickel
Date(Fix.) ($/MT)
Average 12545.42
18-02-2019 12350
15-02-2019 12100
14-02-2019 12345
13-02-2019 12305
12-02-2019 12455
11-02-2019 12475
08-02-2019 12735
07-02-2019 12845
06-02-2019 12930
05-02-2019 12870
04-02-2019 12675
01-02-2019 12460
Cobalt
Date(Fix.) ($/MT)
Average 32416.67
18-02-2019 31000
15-02-2019 31000
14-02-2019 31000
13-02-2019 32000
12-02-2019 32000
11-02-2019 32000
08-02-2019 33000
07-02-2019 33000
06-02-2019 33000
05-02-2019 33000
04-02-2019 34000
01-02-2019 34000