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Daily Base Metals Report

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US stocks rose to record highs on Friday after Powell’s remarks at the Jackson Hole symposium. Indeed, the Fed confirmed that the withdrawal of stimulus should take place at the end of the year, and it would be gradual. Meanwhile, US personal spending growth moderated in July, as the price index rose by 0.4% m/m and 4.2% y/y. The dollar sold off, and the 10yr US Treasury yield softened to 1.3155%. Likewise, stocks climbed in China, as the central bank signalled it would reduce the reserve requirement ratio for banks to support the economy.

LME metal prices were on the front foot today, apart from lead and zinc, which closed lower on the day. Nickel prices were well supported and tested resistance at $19,049/t; prices closed lower at $19,011/t. Copper was well bid in the second half of the day, testing the resistance level of $9,458/t before closing below at $9,410/t; the cash to 3-month spread widened out to $13.75/t. Aluminium advanced in the first half of the day as some Chinese smelters were told to limit output, supporting prices above $2,620/t, the metal closed at $2,649.50/t. SHFE aluminium prices strengthened, closing at CNY20,685/mt; the next day, prices breached highs of CNY21,200/mt. Lead and zinc softened into $2,295.50/t and $3,002/t respectively.

Oil futures climbed higher, with WTI climbing to its best week since June 2020. WTI and Brent surged to $68.65/bl and $72.41/bl. Precious metals were all stronger after Powell’s statement, with gold and silver edging up to $1,814.16/oz and $23.98/oz, respectively.

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

All price data is from 27.08.2021 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.

Please contact the author should you require a copy of any previous reports for comparative purposes. Furthermore, the information in this report has not been prepared in accordance with legal requirements designed to promote the independence of investment research. All information in this report is obtained from sources believed to be reliable and we make no representation as to its completeness or accuracy.

This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. Accordingly, the information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers. Sucden Financial believes that the information contained within this report is already in the public domain. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and they have sought professional advice. Please read our full risk warnings and disclaimers.

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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.