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Daily Base Metals Report

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US stocks edged higher, as investor confidence improved, however, remained on track for a weekly decline. US inflation accelerated in August, growing by 1.3% y/y, above market expectations, partly supported by gains in used cars. In the latest round of trade talks, China retaliated, targeting US diplomats in China, after the recent limit by the Trump administration towards the Chinese diplomats. In the UK, new daily cases of COVID-19 are spreading rapidly, with the R number rising above 1 for parts of the country. The UK economic output surged 6.6% m/m in July, boosted by restaurant activity, however, risks of rising job losses could threaten long-term recovery.

The sentiment on the LME was tentatively positive, only with aluminium closing down on the day at $1,775/t. Copper prices were well supported and tested resistance at $6,750/t on falling stockpiles, closing just off the highs at $6,739/t. Nickel was under pressure in the first half of the day but strengthened, later on, testing the resistance level of $15,100/t, to close at $15,094/t. Nickel cash to 3m spread tightened further to -$45.01/t. Zinc and lead consolidated, closing at $2,471/t and $1,889.50/t respectively. Iron ore was higher on the day, closing at CNY828.50/mt.

Oil futures were range-bound, with WTI and Brent trading at $37.54/bl and $40.08/bl. Precious metals traded higher, edging up to $1,948.98/oz and $26.91/oz.


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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.