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

Daily Base Metals Report

Read disclaimer

US stocks softened marginally today as markets turned their attention to commodities, and the prospect of further inflation increases if these levels persist. With inflation running hot even before the invasion, the risks that persistent high prices will pose to consumer spending are further exacerbated. Germany’s statement to rule out discussion surrounding the Russian energy ban might help to take some steam out of the market, but the compounding effects of this crisis is still likely to send consumer prices in Europe to breach new highs. The dollar was marginally higher, and the 10yr US Treasury yield shot back to the 1.77% level. Elsewhere, China’s exports rose by 16.3% y/y in the January-February period, slightly above market forecasts, but down from a 20.9% growth seen in December, a sign of stable trade performance in the first two months of the year; while steel exports declined 19% y/y to 8.23mt, the value of shipments grew by 34.4%. In Germany, factory orders grew for the third straight month in January, driven by foreign demand.

Performance on the LME diverged massively today, with the majority of metals currently down on the day. Nickel, however, had an unprecedented run, jumping as much as 70%, and continued to break higher above $48,000/t to close at $48,078/t; cash to 3-month tightened into $841/t, the largest backwardation since 2007. Prospects of major shortages of metal, as well as a potential ban on Russian oil imports from the US, squeezed nickel to the second-highest level seen on the exchange; the record high was at $51,800/t in June 2007. Copper hit an all-time high of $10,845/t before selling off in the second half of the day after Germany ruled out the discussion surrounding the Russian energy ban, as the economy struggled to secure energy for essential needs elsewhere. Copper closed at $2,448.50/t. Lead and tin were marginally lower on the day, closing at $2,448.50/t and $46,735/t, respectively.

Oil futures opened higher from Friday’s close on the prospect of a ban on Russian supplies. It has, however, begun to decline in the second half of the day after Germany’s statement. WTI and Brent closed the day higher day-on-day at $119.95/bl and $123.44/bl. Palladium rallied as much as 14%, up to a record high of $3,442/t, on concerns of shortages coming from Russia, but this level was not sustained, and the metal fell back to $3,017/t. Gold and silver were mixed.

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

All price data is from 07.03.2022 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.

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.

Daily Report Softs Technical Charts

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

Weekly Report FX Options

Our FX Options Report contains commentary and analysis covering OTC currency option pricing, volatility and positioning. This week’s focus is on EURPLN and the currency trajectory following the deteriorating economic outlook in Europe and rising rates in Poland.

FX Monthly Report May 2022

Monthly commentary covering the FX markets, providing insights on recent developments on select currency pairs. This month we look at the current inflation outlook across LATAM, Europe, U.S. and U.K. and gauge if central banks will slow their rate hikes. Economic data is weakening and China's poor growth and woeful demand could impact policy makers' decisions. 

Quarterly Metals Report – Q1 2022

Our analysts provide in-depth analysis into the current macroeconomic conditions and how near-term choppiness may subside in the coming months, once the Fed has confirmed its stance on Monetary Policy. The backwardated spreads in the metals market outline the tightness, and the geopolitical tensions between Russia and Ukraine could compound tightness in Europe due to lower energy, metals, and grain exports.