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Daily Base Metals Report

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US stocks erased previous day gains as the White House stated the goal for fiscal stimulus bill is to happen within 48 hours. The dollar softened and the yield on 10yr US Treasuries broke 0.8%, up to 0.8041%, the highest level since June. The yen headed for its best gain vs dollar since August, as PBOC Governor stated that China will face positive growth in 2020. The final presidential debate in the US is taking place tomorrow.

Sentiment on the LME was tentatively positive; zinc gained the most ground closing just below $2,580/t at $2,568.50/t. Zinc cash to 3 months continued to tighten to -$15.75/t. Aluminium was well bid in the first half of the day, but sold off later on to close just above the day’s lows of $1,843.50/t. Copper prices were also stronger, breaking above $7,000/t, the 2-year high, on the back of Chile disruption to close at $6,991.50/t. Lead and tin were on the front foot, closing higher on the day at $1,810.50/t and $18,745/t respectively. Nickel prices were lower, closing at $15,886/t.

Oil futures dropped after an industry report pointed to an increase in American crude stockpiles. At the time of writing, WTI and Brent trade at $40.27/bl and $41.83/bl. Precious metals were all higher today, with gold and silver trading up to $1,927.53/oz and $25.13/oz respectively.

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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.