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Daily Base Metals Report

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US stocks edged higher on the back of continued hopes surrounding the stimulus bill. Moreover, the country initiated the deployment of the first vaccine, with healthcare workers being the first ones to receive the shot. The Fed’s meeting this Wednesday is likely to link asset purchases to measures of inflation and unemployment. The dollar softened out to 90.766, a level last seen in April 2018, and the 10yr US Treasury yield picked up to 0.8981%. The pound jumped by the most in almost two months on relief that a Brexit deal is still possible. In Europe, countries are increasingly likely to face strengthening lockdown restrictions over the Christmas period, as cases continue to surge. EU industrial production declined by 3.8% y/y, less than market forecast.

Activity on the LME was mixed today, with copper and lead closing lower. Nickel was well bid in the first half of the day, but failed above $17,775/t to close at $17,590/t. Aluminium was slightly firmer and managed to close just off the day’s highs at $2,047/t. Zinc and tin prices were on the front foot and closed at $2,836/t and $19,750/t respectively. Copper found support at $7,750/t and closed at $7,751/t. Spreads have mostly strengthened, with lead and copper widening out to -$10.00/t and -$22.00/t respectively.

Oil futures rose sharply today after another tank explosion in the Middle East raised concerns surrounding economic and political stability. At the time of writing, WTI and Brent trade at $46.35/bl and $49.76/bl. Precious metals were marginally lower on the day, with gold and silver edging down to $1,827.11/oz and $23.90/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.