BMO Metals Brief

Research evidence excerpt

BMO Metals Brief

ed by many 5,600

industry participants over CRU’s World Aluminium Summit in London this week. That said, 5,500

ongoing build in SHFE inventories, and last month’s surge in Chinese exports of unwrought and 5,400

5,300

products (+15% y/y), suggests tightness is not being experienced in all regions. 5,200

5,100

 Waiting for a China buyers strike? Meanwhile, most metals are lower in trading so far on 5,000

Thursday, with copper futures falling back ~1% following 6% gains over the last week. Some 4,900

4,800

reports suggest Chinese purchases are starting to slow following the recent rally. Chinese 4,700

purchasing tends to be more reactive to the rate of price change rather than the level, in our 4,600

view. Market participants are also questioning whether the ongoing crackdown on “circular 4,500

invoicing” in China is leading to “artificial” tightness in the cathode market, given invoicing in the 13 Feb 13 Mar 13 Apr 13 May

scrap sector seems to have been particularly hard hit. It’s notable however that other metals Source: LME, BMO Capital Markets

with strong perceived AI exposure like tin and silver have also been surging in recent days,

suggesting speculative money may also be playing a role in industrial metals right now.

Spot Gold

 India gold discounts widen sharply after duty hike: Gold discounts in India widened to a record of

more than $200/oz yesterday (vs ~$17/oz previously) after the government raised import duties 5,600

to 15% from 6%, according to Reuters. The sharp rise in local prices triggered investor selling and 5,400

ETF profit taking in an already weak demand environment, while jewellers and retail buyers

5,200 stayed sidelined. Market participants also warned that the higher duties could revive gold