Metals Daily

This Morning Trading was mixed across the six base metals early today. Lead was the clear leader, rising about 1.7% from Tuesday’s official close to $1,898 a tonne. Copper, aluminium and nickel each gained about 0.1%, trading at $14,458, $3,210 and $15,785 respectively. Tin fell about 0.8% to $53,695, while zinc eased about 0.2% to $3,861. Macro & Geopolitics Global borrowing costs remain a major restraint on metals demand. The US 10-year Treasury yield held near 5.23%, while 10-year government bond yields in Germany and France reached 17-year and 18-year peaks respectively. Oil also remained expensive, with Brent above $103 a barrel as the Middle East conflict continued to threaten supplies. New York Fed President John Williams said policymakers probably need only one further US rate increase this year, cooling expectations of an earlier tightening move. Trade tensions remain important for Europe: Washington is investigating excess industrial capacity in China and other trading partners, including the European Union, Japan and South Korea. Existing trade agreements capping US tariffs on goods from the EU, Japan and South Korea at 15% will be taken into account. Base Metals Better Chinese factory figures gave copper some support, with the official manufacturing index returning to growth at 50.1 and a private survey reaching a five-month high of 52.1. However, trading was quiet before China’s National Day holiday, and physical buying weakened as consumers completed restocking. Copper also received support from possible strike action at Chile’s Centinela mine, where two unions rejected a contract offer and entered government-mediated talks. Elsewhere, the strong dollar, high energy costs and expensive financing continue to limit buying. Lead posted the strongest early increase, while tin and zinc weakened. China’s Dalian Commodity Exchange and Shanghai Futures Exchange will be closed from October 1 through October 7, reducing Asian liquidity. Precious Metals Gold held near $4,180 an ounce and was heading for a 6% monthly decline as high bond yields and expectations of further US rate increases reduced its appeal. A stronger dollar added pressure for buyers outside the United States. Silver slipped to around $61.07, platinum fell to roughly $1,703 and palladium eased to about $1,221. Investors were awaiting US inflation data for further signals on the Federal Reserve’s interest-rate path. Steel Trade policy remains central to the steel outlook. The EU supports international action against excess industrial capacity, but European goods are also included in a US investigation that could lead to new duties. Washington said existing trade agreements, including the 15% tariff cap negotiated with the EU, would be taken into account. Separately, Tenova and GE Vernova are to supply Nippon Steel’s Yawata works with what has been described as the world’s largest electric-arc furnace. Rare Earth Metals The United States is investing in supply chains for permanent magnets and other strategic materials. Hertha Metals raised $133.65 million to produce high-purity iron for US-made rare-earth magnets, including $65 million in US government funding through the Defense Industrial Base program. The EU is also seeking deeper cooperation with the United States and other partners on critical minerals. China’s dominant position means that diversification is likely to take time and require substantial processing investment. Forex The euro traded near $1.1336, close to a 16-month low, and was heading for a 2.4% September decline. The dollar was set for a monthly gain of about 2%, supported by high US bond yields and expectations of another Federal Reserve rate increase before year-end. Sterling was near $1.3224 and also faced a monthly loss of roughly 2.4%. Watch Today Preliminary inflation figures are due from France and Germany, alongside German retail sales and final UK second-quarter GDP. US PCE inflation and final second-quarter GDP are scheduled later in the day and could move the dollar, bond yields and metal prices. Traders should also prepare for reduced Asian activity as the Dalian Commodity Exchange and Shanghai Futures Exchange close for China’s October 1-7 National Day holiday.