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Daily Base Metals Report

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US stocks declined after a softer gain in inflationary data, which is more likely to give the Fed more flexibility on when to begin tapering; however, we do not believe that this will significantly alter their course. US CPI increased by 0.3% m/m in August, the smallest gain in seven months, while still beating the 5% y/y mark. The dollar softened slightly, and the 10-yr US Treasury yield sold off to reach 1.2634%. Meanwhile, China is faced with another wave of coronavirus infections as it locked down a city in the Fujian province, putting additional strain on an already moderating economy. The UK will begin to give out booster shots to those over 50 as part of its winter plan to stall the spread of the virus; lockdowns have also been reintroduced as a possibility if the number of cases gets out of control.

Another day of lacklustre performance on the LME yesterday. At the same time, commodity shipping rates have posted the biggest daily gain in a decade, as average rates for bulk carriers continue to beat multi-year highs. Aluminium lost the most ground, breaching the support level of $2,850/t to close at $2,831/t. Copper weakness moderated after finding support at $9,400/t to close marginally higher at $9,442/t; cash to 3-month spread has widened out to -$15.75/t. Nickel fluctuated but ended up closing marginally lower at $19,623/t. Zinc and lead were also softer, closing on the back foot at $3,052/t and $2,272.50/t.

Oil futures continued to gain ground on a more subdued price gain in the US, despite the statement that China would sell some oil from its strategic reserves. WTI and Brent edged up higher to $70.54/bl and $73.61/bl. Safe havens, such as gold and silver, were seen marginally higher in the second half of the day, increasing up to $1,806.16/oz and $23.84/oz.

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

All price data is from 14.09.2021 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.