1. Metals Outlook
  2. Daily Base Metals Report

US stocks fluctuated ahead of the inflation data as well as the kick-off in the earnings season on Friday. US CPI is out tomorrow, forecast to have come in 90bps lower in March than in February, at 5.1% y/y. A release above this level would reaffirm our base case for another 25bps hike from the Fed. Meanwhile, Friday’s nonfarm payroll data rose at a firm pace while unemployment dropped. While some labour market data is showing signs of easing, the employment data remains historically high and will take months to translate into higher unemployment, given the lag effect, and so, we do not expect to see protracted changes in the labour market soon enough to the Fed to alter its path. Meanwhile, the IMF trimmed its global growth outlook once again, given the recent banking turmoil, forecasting growth of 2.8% by the end of this year. The dollar weakened back to 102 while the 10yr US Treasury yield settled higher at 3.43%.

Base metals saw some marginal upside upon reopening today after China’s CPI data came in lower than expected, bringing forward expectations of greater stimulus support from the government. The nation’s consumer and produce inflation remained muted in March, growing by 0.7% y/y and -2.5%, respectively, suggesting a lack of demand from the domestic market. At the same time, China’s credit expanded at a faster-than-expected rate in March, reaching 5.4tr yuan as the central bank unleashed long-term liquidity to support economic activities. Instead of easing monetary policy, the central bank has reduced the RRR and offered some infrastructure support, and we expect this to provide support for base metal performance over the long term. Copper benefitted slightly, gaining marginal ground to test the $8,850/t level, closing at $8,854.50/t. Aluminium, on the other hand, struggled, falling below $2,300/t to close at $2,302.50/t. Lead and zinc settled marginally unchanged at $2,087/t and $2,757.50/t, respectively.

Oil futures reversed Monday’s loss, jumping back above $80/bl to $81/bl and $85/bl for WTI and Brent, respectively. Gold and silver remained elevated, finding support at $2,000/oz and $25.00/oz.

All price data is from 11.04.2023 as of 17:30


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