daily metals

This morningAluminium and nickel prices are up around 1% this morning, while lead (-1%) and tin (-2%) went down.

What’s Moving Markets?Global equities were weaker, as investors digested a slew of economic data. US job openings, a measure of labour demand, fell below 10mn for the first time since 2021 in Feb, while factory orders declined further, suggesting that the economy could be cooling amid higher interest rates. Commodity markets were dragged higher by the rally in crude oil after OPEC announced further production cuts. This was somewhat tempered by the prospect of higher inflation and its impact on monetary policy. Yields on 10-year US Treasuries fell 8bp to 3.35%, while the USD index weakened by 0.5% to 101.6, its lowest level since Apr 2022.

Base metals ended mostly lower amid still weak and cautious macro sentiment. Copper ignored signs Chile is struggling to maintain output. The world’s largest producer posted its lowest production level in six years. State-owned firm Codelco warned its output woes of 2022 will only get worse this year as it strives to revive its aging operations following years of under-investment. Glencore planned to turn Teck’s major copper pipeline into a serious growth engine, the company CEO said in a call with investors. The takeover proposal, already turned down by Teck on Mon 3 Apr, has painted a vision for its ambition to build the “best and biggest copper company bar none,” Glencore CEO Gary Nagle said. With copper’s fundamental long-term importance and the need for increased supply, it naturally became the common element for both Glencore and Teck’s growth plans. Not only did Gary Nagle want an “unrivalled” copper business through the proposed merger with Teck, Jonathan Price, Teck’s CEO, also described “unrivalled copper growth” as the company’s strategy focus one month ago. Within Teck’s portfolio of assets, the crown jewel is Quebrada Blanca Phase 2 Project (QB2), and it just announced its long-awaited commencement on Friday. QB2’s commencement is set to double Teck’s copper production by the end of 2023.

Iron ore prices steadied as China’s manufacturing PMI beat expectations at 51.9, with the construction sub index hitting a record high.

Lower yields and a weaker USD propelled the precious metals complex higher. Gold prices surged almost 2% to above the $2,000 level, the highest level since Mar 2022, after fresh data for US job openings pointed to a slowdown in the labour market, suggesting the Fed may not need to raise rates much further and could even pause the tightening cycle. Fed funds futures closing in on a 75bp cut before year end. At the same time, the recent banking crises have led to a surge in demand for safe-haven assets. Central banks continue to provide a soft floor under the gold market. Central bank gold buying momentum showed no signs of stalling - reported global gold reserves rose by 52t in Feb. This was the eleventh consecutive month of net purchases, extending the upward trend (based on the 12-month moving average) since Jun 2022. On a YTD basis, central banks have reported net gold purchases of 125t. This is the strongest start to a year back to at least 2010 - when central banks became net buyers on an annual basis. Palladium struggled as weak demand projections offset signals of lower supply. Car sales in China slumped by 20% annually during the first two months of 2023.