Metal Price News Week 15

Weekly metal prices from Alcobra

News that have affected the metal prices

Today’s commodity prices

3 months LME USD 2.330/ EUR 2.115

Cash CLME USD 9.015 / EUR 8.185

DISCLAIMER

Commodity prices have been quite stable in the past three weeks. Copper prices have increased from Cash CLME USD 8.860 to USD 8.970 and peaked at USD 9.050. Aluminium has increased from 3 months LME USD 2.280 to USD 2.350 with USD 2.425 at the highest.

At the same time, the Euro has been strengthened against the US Dollar, which means that in EUR-terms, the 3 months LME aluminium prices are more or less unchanged, while cash LME copper prices have fallen from EUR 8.220 to EUR 8.155.

The metal prices are still following the macroeconomic situation. The primary focus is on the banks, interest rates and whether we are facing a recession. There were some news regarding the OPEC+ reducing oil production by 500.000 barrels a day, but there was no significant reaction in neither oil nor metal prices.

The latest inflation numbers from the US came out yesterday, April 12th. On the surface a reduction from 6.0% in February to 5.0% in March looks like a good sign, but the reason was a decrease in energy prices compared to last year. The core inflation for March was 0.4%, which is a yearly inflation of approximately 5.0%, and this is still high.

Therefore, the main focus at the moment is the next meeting of the FED (the American central bank) and their decision regarding the interest rate. The decision will be influenced by the US Producer Price Index (PPI) and the quarterly reports from the largest American banks (JP Morgan, Goldman Sachs, Citi, Wells Fargo etc.).

The PPI will be published later today. A high PPI indicates that production costs are still increasing, which in turn means that consumer prices – and thus inflation – will also increase. A low PPI, on the other hand, indicates that inflation is falling. The quarterly reports from the banks, which will be published in the coming weeks, will give an indication of how well the larger banks can resist another interest rate increase.

Currently, the expectation is that the FED will increase the interest rate by 0.25% at the meeting on May 3rd, and that they will not increase the interest rate further. Meanwhile, the European Central Bank is expected to increase the interest rate by a total of 1% over the next 3 meetings. This is also the reason for the weakening of the USD against EUR.

The reason for this narrow focus on macroeconomic movements is the continued fear of recession – and an attempt to predict the severity of a potential recession.

The general consensus is that the US will experience a mild recession later this year, which will cause demand, and thus the financial markets, to fall. This will lead to lower metal prices.

 

Factors that influence the commodity prices

Interest rates and inflation -> Credit risk.
Economic data out of China, USA and Europe.
The situation in Ukraine.

 

Prices from April 13th, 2023.

Metal prices from London Metal Exchange.
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