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| CapitalStars Investment Adviser |
Gold Prices Higher, Platinum Rebounds From 9.5 Year Lows Amid Dollar Weakness - Gold prices found their footing Tuesday as a rout of the dollar and falling U.S. bond yields drew support for the yellow metal, and helped platinum prices bounce from 9-and-a-half-year lows. The yellow metal's fall to a nearly seven-month low of $1,238.80 attracted a fresh wave of buying pressure as demand for the safe-haven trade returned as China and U.S. are set to implement tariffs on Friday. The Trump administration's tariff on a range of Chinese goods worth about $34 billion is expected to come into effect on Friday. While China's 25% tariff will also take effect Friday on $34 billion of U.S. goods. Dollar weakness also supported the yellow metal's advanced as the prospect of a global trade war pressured U.S. bond yields.
Jun PMI for aluminium downstream sectors dips in low season - The purchasing managers' index (PMI) for the downstream processing industries of aluminium in June stood at 46.6, according to SMM survey. This was down from 54.8 in May, and fell below the 50 mark that separates expansion from contractionOrders declined for heavy, medium, and thin plates/sheets used in the petroleum and petrochemical industries, hot-rolled coils, construction-use panels, as well as aluminium-plastic composite panels. The PMI in July is expected to remain at June's level with support from large- and medium-sized plants. We maintain our view that demand for aluminium extrusion for construction would account for the majority in domestic aluminium consumption this year.
SHFE lead spread widens on short squeeze - The price spread between the SHFE 1807 and 1808 lead contracts sharply widened to 1,185 yuan/mt on Tuesday July 3 due to a short squeeze in the 1807 contract, SMM believes. Shorts had to cover their positions and left the market on worries about shortage of spot cargoes for delivery. As of July 3, open interest in the 1807 contract stood at 22,090 lots, a relatively high level up to delivery. The spread is unlikely to narrow in near term given the current high open interest. Production at primary lead smelters were affected by the central government’s environmental reviews from the end of May with a 30-50% cut in Jiyuan in Henan province. This lowered lead inventory across China and weighed on the supply.
Oil prices edge up as U.S. supply tightens, Iran sanctions loom - Oil prices edged up on Wednesday following a report of tightening U.S. fuel inventories amid an outage at Syncrude Canada oil sands facility in Alberta, which usually supplies the United States. Prices were also pushed up by looming U.S. sanctions against Iran, which threaten to cut supplies to an already tight market despite pledges by producer cartel OPEC to raise output to make up for the disruptions.Trading activity is expected to be limited on Wednesday by the U.S. Independence Day holiday. U.S. crude inventories fell by 4.5 million barrels to 416.9 million barrels in the week to June 29, the American Petroleum Institute (API) said on Tuesday. Gasoline and distillate stocks, which include diesel and heating oil, also fell, the API said.
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