Written Commentary
Base Metals
Copper: Copper prices rose on hopes of fiscal stimulus in China in its new five-year plan. Benchmark three-month copper on the LME gained 1.3% to $10,805 a ton. China concluded its ruling Communist Party’s ongoing Fourth Plenum on Thursday, announcing that it aimed to build a modern industrial system and strong domestic market. The plan will be officially announced at a parliamentary meeting in March.
Miner Freeport-McMoRan beat Wall Street estimate for third-quarter profit on Thursday, as higher copper prices helped counter lower production after operations were suspended at its Grasberg mine in Indonesia. It forecast fourth-quarter copper sales at 635 million pounds, lower than what it had reported a year earlier, dragged down by the suspension. Freeport’s copper production stood at 912 million recoverable pounds during the third quarter, down 13.2% from a year earlier.
On the data front, industrial output in China grew 6.5% on an annualized basis in September, beating expectations of 5.0% growth despite GDP growing at its slowest pace in a year during the third-quarter. Markets are also closely watching this week’s meeting between top Chinese Communist Party officials, where they will review a proposed five-year plan for the country.
Zinc: Zinc slipped 0.6% to $3,010. Zinc prices rose to the $3,000 mark on Tuesday, close to the high of $3,050 tested earlier in October as persistent bottlenecks among smelting operations pressured the supply of refined zinc.
Aluminum: Aluminum reached another fresh high since June 2022, rising 1.2% in official activity to $2,841.50 as supply worries support prices. South32 said on Thursday that its Mozal smelter in South Africa had failed to secure a suitable power agreement and that the operation was due to be suspended in March next year.
Tin: Tin rose 0.5% to $35,550.
Lead: Lead gained 0.9% to $2,009.
Nickel: Nickel advanced 0.8% to $15,285.
Precious Metals
Gold: Gold prices rose, reversing course on Thursday as geopolitical tensions drove prices higher following new US sanctions against Russia and possible new export controls on China. Focus will shift to PMI data on services and manufacturing activity out Friday alongside September’s CPI inflation report. Markets are nearly priced in for a rate cut from the Fed next week and for another 25 bps cut in December. Regarding Friday’s PMI data, markets will look to clues on the labor market, given the absence of official US data and remarks from Fed officials that the Fed’s focus is more on employment, than inflation. Continued strong central bank purchasing of gold is likely to provide a floor for gold prices, while retail demand from gold-backed ETFs will also lend support.
Silver: Silver prices rose, following moves in gold in safe haven buying after US sanction against Russia were announced. Silver remains nearly 10% below records recorded last week.
Platinum: Platinum futures are up 3.7% to $1,610.
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