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Daily Base Metals Report

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US stocks fluctuated today as investors swayed between the news on a fiscal stimulus bill and the growing number of COVID-19 cases. On the vaccine front, the UK has become the first country to roll out Pfizer’s COVID-19 shot, and the US’s FDA gave early indications that they might approve the emergency-use authorisation. The dollar consolidated and the 10yr yield for US Treasuries softened out to 0.9080%. Elsewhere, the pound pared another day of declines as the government said it will remove controversial sections in its bill.

Activity on the LME was mixed today, with aluminium and copper closing lower on the day. Lead prices were well supported in the second half of the day and tested resistance at $2,100/t to close just off the highs at $2,099.50/t. Nickel was well bid, testing the resistance level of $16,540/t, before closing below at $16,398/t. Nickel cash to 3-months spread widened out to -$54.99/t. Aluminium weakened, closing at $1,990/t. SHF aluminium was also lower on the day, closing at CNY16,037/mt, down 6.3% in a week (Jan21 contract). Likewise, copper was on back foot, testing the key support level of $7,640/t to close at $7,699/t. Iron ore futures on a Singapore exchange headed for another day of gains on the back of a decline in supply in Australia’s main export hubs, closing at $144.94/mt.

Oil futures edged lower today as the continued spread of the virus hampers demand outlook. At the time of writing, WTI and Brent trade at $45.51/bl and $48.74/bl. Precious metals were mixed, with gold and silver edging higher to $1,871.24/oz and $24.58/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.

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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.