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Daily Base Metals Report

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Investment sentiment soured today, driven mainly by omicron spread causing the government to tighten lockdown restrictions. Additionally, one of the US senators put a stall on Biden's $2tr plan, leaving few options for reviving it. As a result, we saw Goldman Sachs reducing their US economic growth forecast to 2.0% in Q1 2022, down from 3%, with smaller downgrades seen over the course of the next year. The dollar softened, and the 10yr US Treasury yield gained ground. Elsewhere, China lowered its borrowing costs from 3.85% to 3.8%; while the decline is marginal, the move to lower the benchmark points to government willingness to support the softening economy.

Low liquidity and volatility combined have intensified market weakness across the board, and further tightening of lockdown restrictions should add to the weakness during the Christmas period. Copper declined due to that, falling down to the $9,435/t level to close at $9,446.50/t. Overall, the base metals complex was mixed, only with aluminium seeing continued gains into $2,725/t levels, China imports of aluminium surged in November; the metal closed at $2,671/t. Nickel saw some moderate gains, climbing up to close at $19,340/t. Lead and zinc were both softer, closing at $2,293.50/t and $3,354.50/t, respectively.

Oil futures sold off, as the demand outlook worsened once more, with WTI and Brent falling down to $66.04/bl and $69.35/bl. Likewise, precious metals softened into $1,794/oz and $22.30/oz, respectively.

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

All price data is from 20.12.2021 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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