Written Commentary
Base Metals
Copper: Copper prices are higher after China’s smelter group said its members would cut mine-fed capacity by 10% in an effort to combat negative processing fees for smelters. Prices on the LME rose 0.4% to $10,985. The China Smelters Purchase Team (CSPT), a group of the top copper smelters, said its members agreed to cut production to improve market conditions. These comments come after the Vice President of China’s Nonferrous Metals Industry Association said on Wednesday that negative processing fees were strongly opposed by the state. China has also reportedly halted about 2 million tons of planned new copper smelting capacity. However, copper markets may not see a difference in supply as several smelting projects that are currently under production in the country are expected to be completed and as China has not announced a curb in output. Markets will monitor news out of China for any signs of a production cap, which would have a much more substantial impact on prices.
Zinc: Zinc added 1.0% to $3,044.
Aluminum: Aluminum rose 0.8% to $2,850.
Tin: Tin was up 2.5% at $38,990. Tin prices have jumped to three year highs as reports of mine supply disruptions in the Democratic Republic of the Congo have caused supply worries.
Lead: Lead gained 0.4% to $1,994.
Nickel: Nickel climbed 0.3% to $14,875.
Precious Metals
Gold: Gold prices are higher following the resumption of trading at the CME as prospects of a Fed rate cut in December provide a tailwind for prices. Recent support for prices has come after key Powell ally NY Fed President John Williams said that interest rates could fall without putting the Fed’s inflation goal at risk, helping to guard against a slide in the job market. Additionally, reports have been circulating that Kevin Hassett, director of the NEC for the White House, is the White House’s favorite choice for the Fed Chair position. Treasury Secretary Scott Bessent said on Tuesday there was a very good chance President Trump would announce a new chairman before Christmas. Traders on prediction markets are pricing a 54% chance that Hassett will be named as Powell’s replacement. Markets are pricing around an 87% chance of a 25 bp cut in December.
On the geopolitical front, the US and Ukraine have signaled positive developments regarding a plan to end the war with Russia after agreeing to modify an earlier proposal that was widely seen as too favorable to Moscow. The long-term outlook for gold will remain supported by continued central bank purchasing.
Silver: Silver futures are up over 3.7% to $54.87 after UBS raised its silver forecast to $8/oz from $5..
Platinum: Platinum is up around 4.40% to $1,655.
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