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Daily Base Metals Report

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U.S. equities are pushing higher at the time of writing, with big tech and banks bid. There was little macro data released, but all eyes are on Thursday’s CPI release in the U.S. we expect another higher reading, forcing the Fed’s hand and increasing the likelihood of a more considerable rate hike in the next meeting. The 10yr yield continues to rally and stands at 1.958% at the time of writing, with 2% firmly in sight. The European market is behind the U.S., and even though we have seen a sell-off in bonds in the last week since the ECB meeting and Eurozone inflation, we expect it has further to go. The BTP-Bund spread has started to rise, and we watch this closely. We expect further rises in yields in Europe as the ECB may have their hand forced by rising inflation.

Metals prices were mixed today; aluminium gained the most ground and posted the highest price since 2008. The market posted a high of $3,236/t but has edged back from these levels at the close. The cash to 3-month spread is at $40/t back and physical premium at multi-year highs as well, inventories in Europe are low. We expect the aluminium price to remain on the front foot. Nickel prices declined through support at $23,000/t and trades at $22,730/t at writing. Copper was marginally softer but remains rangebound; zinc broke through support at $3,600/t as gas and energy prices weakened, but the market remains tight.

Oil prices sold off today as the U.S. increased their forecast for crude production next year. There are also prospects of more production from higher-cost producers with prices near $100/bl. Brent and WTI prices weakened to trade at $90.56/bl and $89.24/bl. Precious metals held steady, with gold trading at $1,827.45/oz and silver at $23.22/oz.

All price data is from 08.02.2022 as of 17:30


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