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Daily Base Metals Report

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US stocks edged higher on a positive economic data backdrop. US manufacturing data pointed to a continued rebound from pandemic lows, as the index rose to 61.2 in May; similar results go for Europe and Asia. The concerns surrounding inflationary pressures persist as factories struggle with supply shortages and labour constraints. The dollar softened, and the 10yr US Treasury yield consolidated into 1.630%, breaching a 50-day moving average. Meanwhile, the pound retreated after topping a 3-year high of 1.4248, as the optimism surrounding economic recovery waned. Euro-area inflation climbed to an annual 2% in May, the highest since 2018, as the economies began to lift lockdown restrictions throughout the month. Likewise, Germany unemployment level declined in the same month as restrictions loosened.

Metals on the LME were mixed yesterday, with some marginal gains and losses seen throughout the day. Aluminium was softer, falling to test the $2,460/t level before closing higher at $2,469/t. Nickel prices deteriorated in the second half of the day, prompting a close near the day’s lows at $18,130/t. Tin closed at $30,723/t. Copper remained range-bound, but remained supported above $10,210/t, closing at $10,245/t; the cash to 3-month spread softened marginally to -$13.00/t. Lead and zinc gained ground, closing at $2,219.50/t and $3,064/t, respectively.

Oil futures pared gains after OPEC+ agreed to hike output in July and gave a bullish forecast. WTI touched the highest level in more than two years of $68.87/bl; Brent traded at $70.21/bl. Precious metals have also fluctuated, as gold erased gains with rising yields, falling down to $1,899.66/oz; silver strengthened into $28.03/oz.

All price data is from 01.06.2021 as of 17:30


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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.