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Daily Base Metals Report

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US stocks declined yesterday as investors continued to assess the impacts of resurging inflationary pressures on monetary policy decisions. Meanwhile, President Joe Biden revealed the strategy to secure supply chains in critical products, such as microchips and medicine, as a means of addressing the bottlenecks that can affect economic recovery. Fed reserve repo usage climbed to a record high as the flood of cash overwhelmed the funding markets. The dollar advanced, and 10yr US Treasury yield fell to a month low of 1.5111%. Elsewhere, Japanese GDP shrank by an annualised 3.9% in Q1 2021, less than expected, as the country weathered one of its largest waves of infections. Germany’s ZEW gauge of expectations rose to the highest level in two years, as the easing of restrictions boosted confidence.

The LME exchange stated it would reopen the trading floor in September. LME metal prices were well bid today despite a dollar advance. Aluminium prices were firmer, however lack of appetite above $2,450/t triggered a close at $2,452.50/t. Nickel prices tested the key resistance of $18,000/t and closed near the highs at $17,942/t. Copper rallied in the second half of the day, trading up to $10,021/t and closing at $9,964/t; cash to 3-month spread widened to -$26.50/t. Zinc prices opened on the back foot but closed higher on the day at $3,016.50/t. Iron ore prices were higher on the day, closing at CNY1,284/mt.

Oil futures steadied after the market rally, with WTI and Brent edging marginally higher to $69.80/bl and $71.91/bl. Precious metals were all softer; gold and silver fell down to $1,890.93/oz and $27.63/oz, respectively.

All price data is from 08.06.2021 as of 17:30

Disclaimer

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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.