1. Reports
  2. Daily Base Metals Report
Non-independent Research

Daily Base Metals Report

Read disclaimer

U.S. data has been progressive in recent days, with the ISM supplier delivery delays declining to 64.9, with price pressures declining as well. The ADP employment change for December was 807k, with the previous month’s figure revised to 505k from 534k. Markit composite and services PMI were expansionary and beat the last months’ figures with readings of 57 and 57.6, respectively. European data slightly below expectations with the Markit services and composite PMI at 53.1 and 53.3, respectively. The dollar index declined today back towards 96 but still holds above this level, the U.S. 10 yr yield holds at 1.6718%, the psychological level at 1.70% is near, and we could have this level tested in the near term.

LME prices were mixed, with aluminium rallying strongly once again and breaking above $2,900/t; however, specs cut their net long position to 118,065, with shorts also declining. Nickel saw the most significant losses after failing above $21,000/t and towards $20,600/t. Copper was again range-bound today, but the cash to 3-month spread is still backwards, although softer than yesterday. Inventories declined across the board today. However, the supplier delays data from the U.S. could indicate that we see the supply chain bottlenecks ease slightly. Iron ore and steel continued to rally in China’s evening session as prospects for Chinese stimulus and looser monetary policy boosts chances for a more upbeat demand outlook than previously thought.

Energy prices continued to push higher following inventory draws in the U.S.; this helps to confirm the market tightness that OPEC+ outlined. Brent broke back above $80bl and trades at $81.53/bl at the time of writing, with WTI at $78.28/bl. Gold edged higher today to $1,824/oz, with silver at $23.10/oz.

 

All price data is from 05.01.2022 as of 17:12

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.

Sign-up to get the latest Non-independent research

We will email you each time a new report has been published.

You might also be interested in...

Daily Report FX

A morning report covering fundamentals and technicals for USD, EUR, GBP, JPY, and CHF.

Weekly Report FX Options

Commentary and analysis covering OTC currency option pricing, volatility and positioning.

Daily Report Softs Technical Charts

Technical analysis and charts for the key sugar, cocoa and coffee contracts.

FX Monthly Report December 2021

Monthly commentary covering the FX markets, providing insights on recent developments on select currency pairs. This month we focus on China, highlighting the fundamentals for the macroeconomy, as well as any changes to the PBOC in the coming months. The recent cut in the risk reserve requirement suggests monetary loosening. We also outline the movement between the onshore and offshore currency for those looking to arbitrage or hedge their exposure. This analysis gives an indication of the average width of the spread what key levels to look out for.

Quarterly Metals Report – Q4 2021

The global macro picture is starting to present some downside risks in the near term as China's economy is set to slow further and supply-chain bottlenecks continue to cap growth. New orders and new export orders in China are contractionary, and we expect demand in Q4. Order backlogs and lead times for products will continue in Q4, limiting growth, and real consumption is weaker than it looks. Higher costs from shipping, raw materials and energy will take their toll on the consumer, and we expect end-user demand to suffer. The final piece of the jigsaw is the reduction in stimulus from central banks and how that will impact financial markets, bond yields, and the dollar has rallied while stocks corrected, but what will this trend continue?