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Daily Base Metals Report

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US stocks fell today amid resurgence of COVID-19 infections in the country, posing as a threat to additional lockdown measures. Additionally, the White House is said to step back from stimulus aid negotiations and leaving it up to the Senate majority to continue the talks with House Speaker. US inflation fell to 0.2% m/m in September, the lowest level in five months, highlighting the repeated threat of rising number of infections on the market. US initial jobless claims, however, continued to fall in the week ending November 7th, as the labour market extended recovery. Elsewhere, the UK GDP growth figure came at 15.5% annualised rate in Q3, exiting technical recession that took place this year, however still remaining below pre-COVID levels.

LME base metals extended gains today, led by lead, which picked up to test the $1,900/t resistance level before closing at $1,899/t. Copper prices edged higher to the resistance level of $6,960/t before closing below at $6,934/t. SHFE copper, however, was down on the day, closing at CNY51,750/mt. Aluminium was well bid, edging up to the $1,935/t level, to close just below the day's highs at $1,930/t. Nickel lost ground today, testing the support at $15,900/t and closed at $15,936/t; the cash to 3-month spread widened out to -$42.00/t backwardation. Zinc and tin prices were both higher today, testing the $2,630/t and $18,400/t, and closing at $2,626/t and $18,300/t respectively.

Vaccine hopes fail to spark a recovery in oil demand, however the futures remain supportive, with WTI and Brent trading up to $42.03/bl and $44.31/bl respectively. Precious metals were all higher; gold and silver trade at $1,882.11/oz and $24.36/oz, at the time of writing.

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.

This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. Accordingly, the information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers. Sucden Financial believes that the information contained within this report is already in the public domain. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and they have sought professional advice. Please read our full risk warnings and disclaimers.

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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.