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Daily Base Metals Report

Risk-On Assets Weaken Amid China and US Concerns

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Authors
Daria Efanova

Daria Efanova Head of Research

Viktoria Kuszak

Viktoria Kuszak Research Associate

Contact research Contact Industrial Commodities

 

Summary

  • US stocks declined as markets grappled with growing recessionary threats. 
  • Weakness in Chinese consumer prices weighed on demand prospects, leading to softer aluminium and copper prices. 
  • The economic outlook for both the US and China also affected expectations for oil consumption, causing prices to correct.

 

Macro

US stocks continued to decline as markets grappled with increasing pessimism regarding the US economic outlook despite prevailing concern over tariffs. Although aluminium and steel tariffs are still expected to take effect on March 12th, recent extensions for Mexico and Canada have led to confusion about when these tariffs will actually be implemented and what their true impact will be. Currently, this uncertainty has caused markets to reassess the potential inflationary pressures that were anticipated following Trump's re-election. Additionally, recent labour data has heightened fears of a possible recession. Forward swaps now indicate an expectation of 78bps of rate cuts this year, compared to 37bps at the same time last month. While recent job figures showed some softness, we do not believe this indicates a long-term trend. The US economy still holds a relative outperformance over the EU and other economies. 

Key US CPI data will be released this week, with expectations for a modest price growth rate of 0.3%, down from 0.5% MoM in January.  The dollar has remained near the multi-month low but struggled below the 103.50 once again today. In the medium term, we anticipate that the index will regain some momentum as markets stabilise at a healthier level, which we estimate to be around 1.05. The US 10-year Treasury yield is 4.20%, and we believe geopolitical developments will be crucial in guiding the bond markets this week. 

Base Metals

Copper experienced volatility in recent weeks, with the LME/COMEX arb widening rapidly. Even the previous 25% tariff implications were not fully reflected in the arbitrage, indicating that the markets remain sceptical about the overall impact of these tariffs. Now that Canada - one of the largest exporters of metals to the US - has received an extension on some of the products, the potential impact may be much smaller than originally anticipated.

For the markets to make further moves, there needs to be a change in the fundamental consumption outlook, especially with improved confidence regarding China's economy. Currently, China's consumer inflation has dropped into negative territory for the first time since early 2024, which is putting pressure on demand prospects. As a result, we expect the complex to remain relatively range-bound in the near term. In the meantime, copper softened to $9,528.50/t as aluminium struggled above $2,700/t, coming back to $2,694/t. Lead jumped higher to $2,048.50/t as nickel retested the key resistance of $16,500/t. 

Precious Metals and Oil

Oil prices weakened on the back of growing pessimism surrounding the US and China consumption outlook, prompting WTI and Brent to weaken to $66/bbl and $69/bbl, respectively. Gold and silver remained broadly unchanged. 

Lme Metals Price And Volume 10032025

All price data is from 10.03.2025 as of 17:30

Disclaimer

This is a marketing communication. The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Please be aware that, where any views have been expressed in this report, the author of this report may have had many, varied views over the past 12 months, including contrary views.

A large number of views are being generated at all times and these may change quickly. Any valuations or underlying assumptions made are solely based upon the author’s market knowledge and experience.

Please contact the author should you require a copy of any previous reports for comparative purposes. Furthermore, the information in this report has not been prepared in accordance with legal requirements designed to promote the independence of investment research. All information in this report is obtained from sources believed to be reliable and we make no representation as to its completeness or accuracy.

This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. Accordingly, the information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers. Sucden Financial believes that the information contained within this report is already in the public domain. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and they have sought professional advice. Please read our full risk warnings and disclaimers.

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