Commodity Market Update: Base Metals, Precious Metals & Crude Oil Gain
Advisory Bazaar Info Services | Market Update
Global commodity markets traded mostly higher during the midday session, supported by strength across base metals, firm Chinese trade data and concerns over crude oil supply through the Strait of Hormuz.
Base Metals
Domestic base metals traded broadly higher. SHFE Copper gained 0.56%, Aluminium 0.86%, Lead 0.48%, Zinc 1.35% and Nickel 0.44%. Tin was the only major decliner, falling 0.30%.
Other industrial commodities also remained firm. Lithium Carbonate gained 1.23%, Silicon Metal rose 2.21%, while Polysilicon surged 5.03%. Alumina declined 0.33%.
Ferrous Metals
Ferrous metals also traded in positive territory. Iron Ore rose 0.28%, HRC gained 0.43% and Stainless Steel advanced 1.39%. Coking Coal and Coke were among the stronger performers, rising 2.60% and 3.22%, respectively.
LME Base Metals
Overseas base metals remained firm. At around 11:40, LME Copper was up 0.69%, Aluminium 0.31%, Lead 0.40%, Zinc 0.44%, Tin 0.42% and Nickel 1.61%.
Precious Metals
Precious metals also maintained a positive trend. COMEX Gold rose 0.43%, while COMEX Silver gained 1.45%.
In domestic markets, SHFE Gold increased 0.28% and the most-active SHFE Silver contract gained 0.11%.
Platinum and Palladium, however, remained under pressure, falling 1.71% and 1.55%, respectively.
Copper Spot Market
Copper premiums in Guangdong strengthened further.
The average price of Guangdong #1 Copper Cathode stood at 108,355 yuan/mt, up 455 yuan/mt from the previous trading session. The average price of SX-EW Copper was 108,245 yuan/mt, up 425 yuan/mt.
High-quality copper was quoted at a premium of 160 yuan/mt, while standard-quality copper was at a premium of 60 yuan/mt against the front-month contract.
China Trade Data Supports Industrial Metals
China’s total foreign trade reached 30.13 trillion yuan during January-July, representing a 17.3% year-on-year increase.
Exports rose 14% to 17.44 trillion yuan, while imports increased 22% to 12.69 trillion yuan.
In July alone, China’s total imports and exports increased 19.2% YoY to 4.66 trillion yuan.
The stronger trade figures indicate resilient external demand and provide a supportive backdrop for industrial commodities, although the impact on metals will also depend on domestic demand and manufacturing activity.
China Semiconductor Exports Surge
China’s integrated circuit exports continued to show strong growth. Cumulative IC exports during January-July increased 99.5% YoY, highlighting continued strength in the country’s semiconductor and technology-related trade.
PBOC Liquidity Operations
The People’s Bank of China conducted 1 billion yuan of seven-day reverse repo operations against 134 billion yuan of maturities, resulting in a net liquidity withdrawal of 133 billion yuan.
For the week, the PBOC’s net liquidity withdrawal stood at approximately 1.2255 trillion yuan.
US Macro Outlook
The US Dollar Index was little changed around 99.96. Market participants are closely watching US employment data for further clues on the Federal Reserve’s interest-rate outlook.
The US Q2 non-farm productivity growth rate was reported at 1.4% annualized, compared with a revised 0.8% in Q1. Unit labor costs increased 1.3%, below market expectations.
The market focus remains on US Non-Farm Payrolls, Unemployment Rate and Average Hourly Earnings, which could influence expectations for the Fed’s future monetary policy.
Crude Oil
Crude oil prices moved higher during the session, with WTI rising 1.01% and Brent gaining 1.06%.
Concerns surrounding oil transportation through the Strait of Hormuz continued to support crude prices.
Meanwhile, preliminary US government data indicated that US imports of Saudi crude fell to zero in July, marking the first full month without Saudi crude imports since 1985. US refiners have been seeking alternative supplies amid supply disruptions and transportation risks.
Saudi Aramco also reduced its official selling price for Arab Light crude to Asian customers by 50 cents per barrel, with the grade priced at a discount of $2 per barrel to the regional benchmark.
Market Outlook
Overall, the commodity market remains broadly positive, with base metals, ferrous metals, precious metals and crude oil trading mostly higher.
Strong Chinese trade data is providing support to industrial metals, while geopolitical and transportation risks around the Strait of Hormuz are supporting crude oil.
Going ahead, markets will closely monitor US employment data, Federal Reserve policy expectations, China’s demand outlook and global supply developments for further direction.
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