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Daily Base Metals Report

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Authors
Daria Efanova

Daria Efanova Head of Research

Contact research Contact Industrial Commodities

US stocks opened higher, but momentum struggled to keep up, and stocks pulled back. Markets continued to raise their expectations for a bigger-than-expected hike for the March meeting, with forward swaps now at 42bps vs 30bps a week ago. Nonfarm payrolls are expected to come in lower at 225k, according to Bloomberg, given January’s unexpected performance; however, the market has underestimated job levels for ten consecutive months, and we expect investors to believe that to be the case again for tomorrow’s release. Today’s initial jobless claims at 211k, the December highs, are adding a layer of uncertainty to the labour market outlook, but we believe a reading above 300,000 for nonfarm payrolls would suggest that it is still running hot. After that, another key data point the markets will pay attention to is January CPI which is set to be released on the 14th, a week before the Fed meeting. Still, we expect a moderate 25bps increase for March and tighter adjustment to come through marginal rate increase to keep the terminal rate higher for longer rather than front-loading it. The dollar weakened to 105.22, and the 10yr US Treasury yield remained under 4.00%.

Another day of lacklustre sentiment across the base metals today, as China’s inflation data pointed to a weaker-than-expected demand recovery from the region. Consumer prices increased by 1.0% y/y in February, down from January’s performance of 2.1%. PPI has further deepened into deflation. Aluminium weakened to $2,328/t despite the news that Europe closed another smelter due to the prevailing energy crisis. Speira is said to be shutting its German plant following a 50% cut in production from September. We have seen some European smelters resume production given softer energy prices; however, the restart has been marginal, with many opening into the economy with a diminishing demand outlook. Copper fluctuated around $8,853/t. Lead and zinc closed marginally lower at $2,084/t and $2,974/t, respectively.

Oil futures benefitted from a weaker dollar, with WTI and Brent gaining ground to $77/bl and $82/bl. Gold and silver also strengthened following the jobless claims; gold and silver now trade at $1,827/oz and $20.10/oz, respectively.

Lme Metals Price And Volume 09032023

All price data is from 29.03.2023 as of 17:30

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