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Daily Base Metals Report

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US stocks extended their position today on positive economic data. US initial jobless claims fell by 33,000 in the week ending January 30th, the third weekly decline, a sign that the labour market is starting to improve as the number of COVID-19 cases subsides. The spread between the 5- and 30-yr US rates steepened to the levels last seen in October 2015, driven by hopes of pandemic-relief packages as well as rising expectations of inflation. At the time of writing, 10yr Treasury yield is at 1.1392%; the dollar strengthened. Meanwhile, the BoE said that the UK economy is heading for a pickup as vaccinations rates remain on target to reach 15m vulnerable in a couple of weeks. UK bond yields rose across the board.

LME metal prices were on the front foot today, apart from copper, which closed lower on the day at $7,823/t. Zinc prices were well supported and tested resistance at $2,644/t, amid the signs of tightening supply of ore in China; prices closed lower at $2,627/t. Aluminium was well bid in the second half of the day, testing the resistance level of $1,995/t, before closing below at $1,993.50/t; the cash to 3-month spread widened out to -$5.00/t. Likewise, SHFE aluminium prices strengthened, closing at CNY15,440/mt; the next day prices rallied on opening up to CNY15,500/mt. Nickel prices remained marginally supported above $17,500/t before closing at $17,646/t. Lead was range-bound but closed higher on the day at $2,044/t.

Oil futures fluctuated today on stronger dollar and promises of supply cuts. At the time of writing, WTI and Brent trade at $56.00/bl and $58.64/bl. Precious were on the back foot, with silver and gold falling to $26.14/oz and $1,790.52/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.