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Daily Base Metals Report

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US stocks began the week on the back foot on concerns of the US stimulus package being delayed. The dollar strengthened, and the 10yr US Treasury yield weakened down to 1.0431%. The European shares were seen lower as investors weighed on consequences of tougher lockdown restrictions across the bloc. On the virus front, Moderna stated that its vaccine has proven to effective against two known variants of COVID-19. Meanwhile, the US surpassed 25m of cumulative cases or about 8% of the population.

Activity on the LME was mixed today, with copper, nickel and zinc closing lower. Tin continues to be well bid, but failed above $22,600/t and closed at $22,450/t. Aluminium was slightly firmer and managed to break above the $2,010/t level to close at $2,012/t. Lead and nickel prices were marginally softer on the day, closing on the back foot at $2,047/t and $18,250/t respectively. Copper edged lower down to the support level at $7,950/t and closed higher at $7,969/t; cash to 3-month spread tightened back to -$2.00/t.

Oil futures fluctuated on demand concerns after the uncertainty surrounding the release of the US stimulus bill. At the time of writing, WTI and Brent trade at $52.30/bl and $55.53/bl. Precious metals were softer, with gold and silver edging down to $1,854.90/oz and $25.38/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.