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Daily Base Metals Report

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Global equity markets have trended higher on signs of a fast-tracking of the US vaccine. Both S&P 500 and Nasdaq touched new highs. Asian stocks advanced higher after the White House stated that its ban on WeChat will not be as broad as previously expected. Eyes now turn to the Fed’s annual Economic Policy Symposium on Tuesday, where the new long-term inflationary strategy will be the main focus.

Risk appetite improved for the LME metals today, only with zinc and tin lower on the day. Aluminium prices were well-supported above $1,765/t and closed at $1,770.50/t, the cash to 3-month spread has widened into -$40.34/t. Copper trended higher to test the resistance at $6,580/t before closing below at $6,516/t. Nickel rallied to $14,950/t, the highest since November 2019, on the back of concerns surrounding tightening supplies, as rising Chinese demand for stainless steel adds to the worries. Nickel closed at $14,926/t. Tin lost the most ground, breaking below the key support level of $17,500/t to close at $17,310/t. Zinc was weaker today, closing at $2,445.50/t. Iron ore futures slid to close at CNY838/mt as Fortescue Metals Group, one of the biggest exporters, reported record shipments.

Oil futures rose as two storms heading towards the US Gold Coast location urged producers to shut nearly 60% of offshore production. At the time of writing, WTI and Brent trade at $42.48/bl and $44.84/bl. Precious metals declined today, with gold and silver down to $1,933.88/oz and $26.64/oz respectively.

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.

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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.