On Monday, April 8th, base metal prices on the London Metal Exchange (LME) followed an upward trajectory, buoyed by optimistic macroeconomic news from the US that exceeded expectations on the preceding Friday. Simultaneously, LME warehouse inventories saw decreases.
Three-month futures for aluminium saw a modest climb of 0.4 per cent to reach $2,462 per tonne (t), while nickel prices stood at $17,875 per tonne, also showing a 0.4 per cent increase. Copper settled at $9,419 per tonne, and zinc experienced a 0.9 per cent uptick, reaching $2,663 per tonne. Lead prices saw a rise of 0.6 per cent to $2,136 per tonne.
Metal prices surge amid manufacturing optimism
At the beginning of the quarter, copper, zinc, and aluminium prices surged, reflecting signs of a rebound in manufacturing. Both US and Chinese output showed improvement, yet uncertainties persisted due to geopolitical tensions and questions surrounding potential interest rate cuts. The focus now turns to the ECB's reaction function ahead of pivotal inflation data and the kickoff of earnings season.
Commodity trader Trafigura has forecasted that copper demand from AI and data centres could increase by one million metric tons by 2030, further intensifying supply deficits. The shift towards electric vehicles and renewable energy technologies in the energy transition is anticipated to propel a rise in copper consumption. Concerns have emerged regarding Western countries' ability to meet their net zero targets, especially with China's significant role in copper production.
Other prices
Copper prices on the Commodity Exchange (COMEX) increased by 0.9% to $9,393 per tonne (t) from the previous closing price of $9,305/t. As of yesterday, the domestic non-ferrous market prices in India continued to show a positive trend, supported by the rise in LME futures.
According to data from LSEG, futures traders have tempered their expectations for Federal Reserve rate cuts in 2024, now estimating around 60 basis points, down from 150 points at the beginning of the year. Given the backdrop of economic resilience, uncertainty lingered regarding the timing and extent of these cuts. This adjustment in expectations coincided with a rise in Treasury yields. Investors are eagerly anticipating March's CPI release for further insights into potential rate movements.
China's recent Tomb-Sweeping holiday saw domestic travellers collectively spending $7.5 billion, with per capita spending reaching $60.14. This figure surpassed levels observed five years ago. Analysts view this robust spending as a positive signal for the economy, suggesting a bolstered consumer confidence amid persistent challenges such as a downturn in the property market and elevated youth unemployment.
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