The Commodities Feed: US jobs report pressures the complex

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The metals complex came under pressure at the end of last week. LME copper settled more than 3.8% lower on Friday, taking it to its weakest level since April. Similarly, gold sold off, settling almost 3.5% lower on the day. A stronger-than-expected US jobs report led the USD and US treasury yields to surge as the data raised doubts about the prospect for Fed rate cuts anytime soon.

Chinese preliminary trade numbers for May showed that monthly imports for unwrought copper rose 16.8% MoM and 15.7% YoY to 513.8kt, despite weak physical consumption. Cumulative copper imports rose 8.8% YoY to 2.33mt in the first five months of the year. Copper concentrate imports increased 11.6% YoY to 2.26mt in May, while year-to-date imports were up 2.7% YoY to total 11.6mt. In ferrous metals, iron ore imports rose 6% YoY to 102mt last month (highest since Jan’24), while cumulative imports increased 7% YoY to 513.7mt. Chinese metal exports remained robust in May. Unwrought aluminium and aluminium products shipments rose 18.8% YoY to 564.5kt in May, while exports of steel products rose 4.5% YoY to 9.63mt last month, which took cumulative exports so far this year to 44.7mt, up 25% YoY.

Recent data from Cochilco show that Codelco’s total copper production fell over 6% YoY to 95.1kt in April, primarily due to delays in structural projects. Similarly, BHP’s Escondida copper mine production stood at 98kt in April, down 6.8% YoY. This lower output will do little to help ease concerns over tight mine supply. However, mine production at Collahuasi rose almost 2% YoY to 42.3kt during the above-mentioned period.

Shanghai Futures Exchange (SHFE) inventory data shows weekly inventories for all the base metals (except zinc) rose over the reporting week. Copper stocks rose by 15,269 tonnes for a sixth consecutive week to 336,964 tonnes (the highest since 27 March 2020), and aluminium inventories increased 4% WoW to 226,582 tonnes. Lead and nickel stocks rose 7% and 0.7% respectively over the week, while zinc inventories fell 1.5% to 127,153 tonnes.  

China halted buying gold for reserves in May after the precious metal surged to a record high ending an 18-month buying spree. Gold held by the People’s Bank of China was unchanged at 72.80 million troy ounces in May, according to data released last week. This marked the first time the PBoC did not add to its reserves since October 2022. China’s appetite for gold started to show signs of easing in April, when the PBOC bought only 60,000 troy ounces, down from 160,000 ounces in March, and 390,000 ounces in February.

The latest positioning data from the CFTC shows that managed money net longs in COMEX gold increased by 1,540 lots to 180,761 lots as of 4 June. In contrast, and not surprising due to the more recent price action, speculators decreased their net long in COMEX copper by 8,819 lots to 54,968 lots over the last reporting week.