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Daily Base Metals Report

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US stocks declined as the markets reopened on Tuesday, with investors weighing on the crude oil price turmoil. In Asia, stocks were mostly lower, and the focus shifted on the Chinese regulator ordering the removal of Didi’s platform from app stores not so long after its US listing. US service providers continued to grow in June, albeit at a lower-than-expected rate, as the measure of employment contracted. The dollar strengthened, and the 10yr US Treasury yield softened into February 2021 lows of 1.3582%. The Fed’s minutes are out today and may provide further context to Fed’s hawkish decision last month. Elsewhere, the UK has announced the easing of the remaining lockdown rules starting in mid-July in hopes of “learning to live with” the virus as the economy fully reopens. Meanwhile, Germany’s investor confidence eased in July as supply bottlenecks continue to weigh on manufacturing.

Activity on the LME was mostly down yesterday, as the dollar rallied, only with lead closing higher. Copper was subject to strong selling pressure, falling below the key support level of $9,400/t and closing at $9,312/t. Copper cash to 3-month spread widened out to -$31.50/t. Nickel and aluminium prices were softer, closing at $17,994/t and at $2,530/t, respectively. Tin was mainly range-bound, closing lower on the day at $31,669/t. Lead was supported above $2,280/t and closed at $2,293.50/t.

The crude prices edged up to 6-year highs before selling off later in the day, as OPEC+ failure to confirm the outlook raised concerns of oversupply. WTI and Brent traded at $73.66/bl and $74.86/bl. Precious metals were mixed once again, with gold holding up above $1,800/oz and silver down on the day to $26.28/oz.

For more in-depth analysis of base and precious metals, please see our Quarterly Metals Report.

All price data is from 06.07.2021 as of 17:30

Disclaimer

This is a marketing communication. The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Please be aware that, where any views have been expressed in this report, the author of this report may have had many, varied views over the past 12 months, including contrary views.

A large number of views are being generated at all times and these may change quickly. Any valuations or underlying assumptions made are solely based upon the author’s market knowledge and experience.

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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.