Metals Daily

This MorningZinc is showing a plus of around 2% this morning. Nickel went up by 1.5%. Both aluminium and tin gained around 1%. Copper remained pretty much unchanged overnight, while lead dipped a bit on the last trading day of this week.What’s Moving Markets?Global equities fell after fresh data raised concerns about the health of the global economy. The J.P.Morgan Global Manufacturing PMI posted 49.7 in Jul, down from 50.8 in Jun In the US, the ISM Manufacturing PMI pointed to a bigger-than-expected contraction in the manufacturing sector, the deepest in eight months and employment fell to 2020-lows. Yields on 10-year US Treasuries fell 5bp to 3.98%, while the USD index strengthened by 0.3% to 104.4.The J.P. Morgan global manufacturing output PMI fell 2.0-pt to 50.2 in Jul, its largest single-month drop since Jun 2023. In addition to a slowdown in output growth, survey details suggested declining new order intakes and moderation in the pace of hiring. Although the Euro area remained the weakest performing region, output growth slowed sharply in both the US and China according to the Jul surveys. There was evidence of contractionary factory activity in China by both the NBS and the Caixin PMIs. The pricing PMIs eased in Jul, but cost concerns remain, especially given the ongoing inflationary impact of higher shipping costs.Profit-taking took gold off its highs, while the PGMs were undermined by contraction in global manufacturing PMIs, and China in particular. Nevertheless, gold had its highest monthly close in history. Traders in the futures market bet on three interest rate cuts this year following a Fed meeting at which chair Powell signalled that the central bank was prepared to start loosening monetary policy in Sep. Data from the Central Bank of Jordan shows that its gold reserves rose by 2t in Jun - the second consecutive month of buying. YTD net sales is now just 1t, with gold holdings now at just over 70t. The PGMs drifted lower on weaker global manufacturing data.Base metals closed down on macro headwinds and in particular the contraction in global manufacturing activity. Expectations for Chinese copper demand growth in H124 were clearly too optimistic. The market had been expecting copper demand in China to grow 3 to 4% this year. But, if the current trend continues, it is set to fall by around 1% this year. Aluminium prices have experienced a significant drop in the last two months and has erased almost all the gains that the metal registered between Mar and May this year. Weaker demand and renewed growth in Chinese smelter production have conspired to pressure the global market.Chilean miner Antofagasta has commenced work to install a second concentrator at its Centinela copper mine in the country’s north, which will add 144,000tpa to overall production. The $4.4bn project is already 14% advanced, the company said, adding that it has begun blasting in the sector where the new facility and support infrastructure will be built. “Nueva Centinela represents the group’s confidence in copper as a fundamental material for the global energy transition, where Chile is called to be a leading country,” Antofagasta’s CEO, Iván Arriagada, said in the statement. “The project is already promoting regional employment and the development of local suppliers, which is essential for this investment to be a relevant contribution to the region and its inhabitants,” Arriagada said. The expansion project, approved in Dec last year, will also increase the current molybdenum plant’s capacity and a new development of the Esperanza Sur pit, with the introduction of new autonomous trucks. Nueva Centinela also includes a 6km low-friction belt to connect the crushing area and the concentration plant. Centinela’s second concentrator is expected to start operations in 2027, employing more than 13,000 workers at the peak of the project’s construction.Iron ore remained under pressure amid the lack of any further support measures for China’s property sector. Rio Tinto highlighted the depth of China’s property market slump when it said that steel demand from that sector was down by as much as 30% from its peak in 2020.