Metal inserted into the relatively calm day with an average gain of 0.1 percent and the average range plus minus 1.1 percent to 0.7 percent. Nickel led on the way down with a 1.1 percent drop to $26,400, while tin was the best performer with a 1.5 percent gain. Equities in Europe and the US failed to follow on from the strength seen in Asia on Tuesday morning and the dollar was generally quiet – so a day of consolidation.

This morning the metals are more buoyant with average gains of 0.8 percent, with zinc leading the advance with a 2.3 percent gain to $2,373. Interestingly zinc had been lagging behind the rebound in the other metals so is now showing signs of catching up. Copper is up 0.6 percent at $9,540. Volumes remain relatively quiet with 1,894 lots of copper, 1,430 lots of zinc and 661 lots of aluminium traded. Total volume has been 3,768 lots as of 7am GMT.

In Shanghai the June contracts are up an average of 1.5 percent, zinc is up 3 percent at Rmb 18,600, copper is 1 percent higher at Rmb 71,980 and aluminium is up 0.4 percent at Rmb 16,830. Spot copper in Changjiang lags the futures with a 0.4 percent gain to Rmb 71,350-71,600, so remains in contango, while the LME/Shanghai arb remains negative at $210/tonne.

The Shanghai Futures Exchange (SHFE) will start trading lead futures tomorrow. The contract period for the futures will range from September 2011 to May 2012. The daily limit on price movements will be 6%.

Equities – the Dow dipped yesterday, it closed down 0.2 percent, the Nikkei is down 1.7 percent, the Hang Seng is off 0.3 percent, the MSCI Asia Apex is down 0.2 percent and China’s CSI 300 is bucking the trend with a 1.3 percent increase. Concerns over the spread of radiation and further production delays have weakened the Nikkei as that refocuses the market on the short term issues, rather than the medium term recovery outlook.

The dollar has picked up slightly – the dollar index is at 75.52, the recent low was 75.25. The euro is down at 1.4180, the pound is strong at 1.6376, the aussie is last at 1.0096 and the yen is strong at 80.83. Gold is firm at $1,429, as is silver at $36.35 and oil is high at $105.00. Strong oil and any rebound in the dollar may well provide some headwinds.

The economic calendar is fairly busy, Portugal’s government is voting on austerity measures, the UK budget is being announced and various central bankers are talking, including Fed Chairman Bernanke. On the data front he focus will be on EU new industrial orders and US new home sales, see table below for more details

On balance the rebounds off last week’s lows are continuing as prices stretch to the upside and gradually recoup ground lost in the aftermath of the earthquake in Japan. Whether the current economic environment warrants continued price rises is a moot point – our overall view is that the short to medium term consequences of the earthquake and higher oil prices should be negative for metal prices. However, perhaps buyers are strong enough to look further forward. A lot is likely to depend on whether broader confidence remains robust or whether it suffers if companies start to be affected by supply-chain issues.

LME Overnight Performance
6:59 AM +/- +/- % Lots
Cu 9540 60 0.6% 1894
Al 2597 6.75 0.3% 661
Ni 26518 118 0.4% 119
Zn 2373 53 2.3% 1430
Pb 2693 16 0.6% 388
Sn 30250 100 0.3% 24
Steel Med 0 0 0.0%
Economic Agenda
Time Country Period ACTUAL Expected Previous
9:30am UK MPC Meeting Minutes 3-0-6 3-0-6
9:30am UK BBA Mortgage Approvals 29.4K 28.9K
10:00am EU Industrial New Orders m/m 1.4% 2.6%
11:00am US FOMC Member Fisher Speaks
12:30pm UK Annual Budget Release
2:00pm EU Belgium NBB Business Climate 5.1 5.8
2:00pm US New Home Sales 291K 284K
2:30pm US Crude Oil Inventories 2.0M 1.7M
3:00pm EU Consumer Confidence -11 -10
4:00pm US Fed Chairman Bernanke Speaks
11:50pm JPN Trade Balance 0.68T 0.19T


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