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Daily Base Metals Report

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Despite the U.S. extending the lockdown period to April 30th, major U.S. equities are gaining ground. The S&P 500 has filled the gap as the DOW has broken above 22,000. China’s economy is returning to full capacity slowly, with the economy at 85% as of March 27th, excluding the Hubei province. The road to pre-outbreak levels is likely to be slow, to prevent a second breakout of the virus. This week’s macro calendar is packed, and we expect this to feed volatility.

Price on the LME was weak today with all prices losing ground except tin. Copper prices fell towards $4,765/t as demand outside of China is expected to be inadequate for some time. Cash to 3-month spreads has consolidated Friday’s weakness. Aluminium prices have fallen 1% to $1,530.50/t, cash to 3s softened to $32/t where the spread as previously found support. Lead, and Zinc prices have held their nerve today, spreads tell a mixed outlook with lead softening today to -$10.50/t. Zinc has marginally tightened into -$8.75/t.Elsewhere, gold prices are marginally softer but hold above $1,600/oz at the time of writing. Oil prices have taken the biggest hit today with WTI and Brent down 5.4% and 11.6% respectively.

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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.

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COVID cases are rising across the globe as the delta variant spreads, this is causing some nervousness in financial markets, especially with the higher inflation rhetoric. Commodity prices have fallen since the Fed changed their tune inflation, the dollar has stabilised which has also been a headwind to prices. The summer months are traditionally quieter for metals demand which could prompt metals to consolidate. If the delta variant continues to spread, we may see higher levels of stimulus for longer. As things stand stimulus levels are set to be tapered and this could be brought forward if inflation remains high. We expect markets to remain volatile but on lower volume through the summer months.