Industrial metals looking stronger, while bullion pauses

London (Mar 5)   After Monday’s Ukraine-based weakness, the base metals put in a strong rebound yesterday that saw average gains of two percent, with nickel and zinc breaking higher above recent highs while copper remained a laggard.

Precious metals were generally weaker as tension in Ukraine eased, gold and silver were off 1.1 percent, platinum was off 0.2 percent at $1,355, while palladium continued to climb, finishing up 1.6 percent at $761.

This morning the base looking positive with average gains of 0.5 percent and volume has been high with 12,325 lots traded as of 07:13 GMT – the highest volume has been seen in zinc, where 4,492 lots have traded compared with 3,439 lots of copper. While nickel, lead and zinc are doing well, copper seems very reluctant to follow, which makes the whole picture somewhat confusing.

Precious metals are up 0.3 percent on average this morning, although bullion is quiet with gold and silver consolidating, last at $1,334.10 and $21.18, while the PGMs are rising still, with platinum up 0.4 percent at $1,461.10 and palladium up 1.1 percent at $769.75 as there are some reports of tightness emerging in the physical market.

In Shanghai, the May base metals are up an average of one percent with zinc up the most with a 1.3 percent gain to Rmb 15,290, copper up 1.2 percent at Rmb 49,380, lead up one percent at Rmb 14,000 and aluminium up 0.6 percent at Rmb 13,295. Rebar is up 0.3 percent at Rmb 3,317.

Spot copper in Changjiang is up 1.1 percent at Rmb 49,000 to 49,250, which puts it in a small contango with the futures, while the LME/Shanghai copper arb ratio is last at 1:7, which means the commercial arbitrage window remains firmly closed.

Gold and silver in Shanghai have eased with losses of 1.1 percent on gold to Rmb 263.40 and of 0.7 percent on silver to Rmb 4,269.

Source:  FastMarkets