metals daily

This MorningLead lost around 2% this morning. Nickel, tin and zinc all went down by 1%. Some little changes for copper and aluminium, both metals are close to their level of LME closing yesterday. What’s Moving Markets?

Improved risk appetite boosted sentiment. A risk-on tone reverberated across markets on the prospect of more support for the US banking sector. Commodities rallied as the focus returned to fundamentals. The Fed will keep raising interest rates despite traders betting otherwise as fears of a banking crisis convulse markets, according to BlackRock. This time is different as the Fed and its peers have made clear that troubles buffeting the banking sector won’t halt their battle against inflation. Yields on 10-year US Treasuries rose 3bp to 3.56%, while the USD index weakened by 0.4% to 102.5.

US consumer confidence held up better than expected in Mar against the backdrop of several bank failures and debate about the outlook for interest rates. The Conference Board’s consumer confidence index rose to 104.2 in Mar from 103.4 a month earlier. Analysts had expected a decline. The cut-off date for the latest survey was 20 Mar, 10 days after the failure of Silicon Valley Bank, which triggered broader concerns about the banking system.

Across the world, a structural growth slowdown is underway: at current trends, the global potential growth rate - the maximum rate at which an economy can grow without igniting inflation - is expected to fall to a three-decade low over the remainder of the 2020s, warns the World Bank. International trade - which from the 1990s through 2011 grew twice as fast as GDP growth - is now barely matching it. The result could be a lost decade in the making - not just for some countries or regions as has occurred in the past - but for the whole world.

Precious metals were steady as improved risk appetite in financial markets was offset by a weaker USD. Gold’s biggest short-term challenge being the wide gap between market and FOMC rate expectations. The market is currently pricing in a May peak followed by +5 rate cuts in the following twelve months. Silver has been playing catch-up with gold of late, with the gold:silver ratio sliding 7.8% over the past two weeks.

Improved risk appetite saw the base metals make gains. Copper is having another look at trendline resistance above $9,000 as increased M&A activity in the sector (Lundin Mining to buy 51% in SCM Minera Lumina Copper Chile, a wholly owned subsidiary of JX Nippon Mining which operates the Caserones copper-molybdenum mine in Chile) highlights the metal's potential in the energy transition at a time of falling visible stock levels. Nickel prices gained after the LME opened trading in Asian hours for the first time since the exchange suspended trading following the short squeeze a year ago. The short speculative position on the LME reached 20% of open interest by Friday's close, the largest since Jul 2022, but shorts have recently been closing out some positions. SHFE nickel inventories slid 28% last week to the lowest since Jul last year, boosting positive sentiment.

Iron ore prices were steady as macro headwinds eased and on improved risk appetite ahead of peak construction activity.---Published in collaboration with independent metals consultant RBMChttps://www.rbmc.world

*DISCLAIMER*This report has been prepared and issued by Robin Bhar Metals Consulting (RBMC). All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however, we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those RBMC at the time of publication.Please see https://www.rbmc.world for more information.