Daily Metals

THIS MORNING Base metals were mixed with a softer bias early Friday against Thursday’s official close. Lead was the weakest, down 0.6%, while aluminium fell 0.4% and copper eased 0.1%. Nickel and zinc each rose 0.2%, while tin was virtually unchanged. The pattern suggested selective buying rather than a broad market move, with copper still holding close to recent highs. MACRO & GEOPOLITICS Central banks are stepping up their response to inflation. The Bank of Japan raised its policy rate to 1.25%, a 31-year high, following this week’s Federal Reserve increase, while the Bank of England held rates on Thursday but warned that borrowing costs might still need to rise. Brent crude was falling for a third day as hopes for alternative Middle Eastern supply routes reduced immediate concerns, although it remained above $100 a barrel. Fresh Saudi-Houthi strikes showed that energy and shipping risks had not disappeared. For European metal traders, high interest rates and uncertain fuel costs remain important pressures on demand, financing and transport costs. BASE METALS Copper was slightly lower this morning but remained on course for a weekly gain of around 1.6%. Chinese physical demand has strengthened since prices retreated from recent record highs, with the Yangshan import premium reaching $121 a tonne, its highest since October 2022. That buying is helping copper withstand pressure from higher interest rates and uncertainty over possible US tariffs on refined metal. Zinc was also firm, with supply concerns lingering after an accident at Korea Zinc’s Onsan smelter. Nickel edged higher against Thursday’s close, while aluminium and lead were weaker. Falling oil prices may provide some relief for energy-intensive smelters, although energy costs remain elevated. PRECIOUS METALS Gold edged 0.3% higher to around $4,355 an ounce, supported by softer oil prices and a dollar below its recent peak. Silver rose 1.1% to about $65.91 and was heading for a weekly gain, while platinum gained 1.4% to around $1,793 and palladium rose 1% to about $1,304. Continuing conflict is supporting demand for safer assets, although the shift towards higher global interest rates may limit further gains. STEEL The UK government’s support for British Steel is facing greater scrutiny after lawmakers said nationalisation had already cost taxpayers more than £500 million without a clear end point. This adds uncertainty over the future structure and funding of UK steelmaking. Britain is also seeking inclusion in the EU’s planned “Made in Europe” industrial policy. If included, UK producers could gain opportunities in European procurement and manufacturing supply chains; exclusion could deepen competitive pressure on the sector. RARE EARTH METALS Rare earth supply is expected to feature in next week’s US-China summit. Shipments from China have improved, but some US aerospace and semiconductor companies reportedly still face access problems, leaving trade vulnerable to renewed restrictions. Separately, Australia’s Arafura Rare Earths extended an agreement to supply a global wind-turbine manufacturer with 500 tonnes of neodymium-praseodymium oxide annually for five years, with a potential extension to eight years. Europe remains behind in developing its own critical-mineral chains, with financing and permitting problems threatening several EU-backed projects and only limited rare-earth capacity in the bloc’s strategic project pipeline. FOREX The euro was steady near $1.148 but was heading for a weekly decline of about 1%, its weakest weekly performance since June. A weaker euro raises the local cost of dollar-priced metal purchases, although it increases euro receipts for sellers pricing scrap against LME contracts. Sterling remained close to a seven-week low around $1.335 after the Bank of England held rates. The yen weakened after Japan’s rate increase because the central bank’s message was less aggressive than markets expected, while the dollar remained below its recent seven-week high. WATCH TODAY UK retail sales figures are due at 06:00 GMT and may affect sterling and the outlook for British metal demand. Bank of Japan Governor Kazuo Ueda is scheduled to speak at 06:30 GMT, followed by US industrial production at 13:15 GMT. Comments from Federal Reserve officials Michelle Bowman and Jeffrey Schmid could also move the dollar and bond yields.