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Daily Base Metals Report

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Authors
Daria Efanova

Daria Efanova Head of Research

Viktoria Kuszak

Viktoria Kuszak Research Associate

Contact research Contact Industrial Commodities

US stocks made modest gains as the market braced for the Fed decision later tonight. The central bank is widely expected to cut interest rates by 25bps in its final meeting of the year. After this, the market focus will shift to 2025 and the anticipated cuts for next year. Investors have significantly reduced their expectations for a strong cutting cycle, bringing the number of 25bps cuts next year to 3-4. However, lingering uncertainty surrounding the potential impact of Trump’s incoming administration on inflation remains. The policymakers’ notes after the meeting will be crucial as markets adjust their expectations for 2025. Meanwhile, US industrial production figures showed a shallow decline in November, marking the third consecutive month of decrease. Conversely, US retail sales increased by 0.7% in the same month, driven by a rise in car purchases and strong online shopping activities. Elsewhere, UK inflation rose to 2.6% in November, further solidifying expectations for no rate change from the BOE tomorrow. This should keep the GBP supported at current levels. 

Base metals held their nerve today following yesterday's weakness. Aluminium led the decline yesterday, following a sell-off in the alumina space due to high aluminium export figures out of China.  Still, we do not anticipate that the pressure on alumina will ease in the long term. With lower tax rebates and the incoming Trump administration in January, the 15.9% increase in exports in November suggests that exporters were looking to capitalise on higher profit margins before the incentives diminish on December 1st. We expect that December export figures will likely be lower. Today, markets showed some resilience against the decline, and we expect that mean-reversion will bring the prices slightly higher in the near term. In the meantime, aluminium held above the $2,500/t level as copper edged higher back above $9,000/t. Lead and zinc continued to weaken to $1,981.50/t and $2,995/t, respectively. 

Oil futures strengthened following US crude stockpile drop, prompting WTI and Brent to reach $71/bbl and $74/bbl. Precious metals weakened ahead of the Fed meeting, with gold and silver trading at $2,637/oz and $30.17/oz, respectively.

Lme Metals Price And Volume 18122024

All price data is from 18.12.2024 as of 17:30

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