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Daily Base Metals Report

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US stocks traded higher today, led by tech shares. US manufacturing production rose by 1.0% m/m in August, less than forecasted. In relation to US-China trade talks, WTO stated that American tariffs on Chinese goods violated international rules, further complicating the relationship between the biggest trading partners. The dollar strengthened to 93.122, and the yield on 10yr US Treasury rose to 0.6821%. The Yuan climbed to the highest level of 6.77 since May 2019 on the back of positive retail sales data in August; the index grew 0.5% y/y – for the first time this year, and the unemployment rate in China has dropped from 5.7% in July to 5.6% in August.

Activity on the LME was mixed today with zinc and tin closing higher. Lead was subject to strong selling pressure, falling below the key support level of $1,910.00/t and closing at $1,908/t. Aluminium prices were softer, closing at $1,789.50/t. Nickel gave back its recent gains, closing on the back foot at $15,198/t; cash to 3-month spread widened into -$55.00/t. Similarly, copper broke support $6,780/t as copper stockpiles rose the most in 3 months in August, closing at $6,761.50/t. Zinc, the best-performing base metal this quarter, edged higher to test $2,540/t, before closing lower at $2,496.50/t. Tin prices were higher on the day, closing at $18,209/t.

Oil futures rose after the economic data from China and the US sparked confidence in the markets. At the time of writing, WTI and Brent trade at $37.84/bl and $40.15/bl respectively. Precious metals erased gains on a positive economic outlook and a rising dollar, with gold and silver trading up to $1,953.07/oz and $27.15/oz respectively.

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