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Daily Base Metals Report

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US stocks ¬after the tech giant performance exceeded expectations, ahead of the key rate decision by the Federal Reserve tonight. The Federal Reserve raised rates by 75bps today as it tries to cool inflation that continues to break new highs. US economy is forecast to have grown by 0.4% in Q2, while narrowly avoiding technical recession, still expected to show signs of a weakening economy. US durable goods orders rose unexpectedly in June as demand for equipment has surged. The dollar edged higher and the US Treasury yield fell to 2.77%. China’s cost of borrowing in the overnight repo market bell below 1.00%, down 93bps this month, as liquidity conditions are not improving despite PBoC support. At the same time, China’s industrial profits rose by 0.8% y/y in June, first monthly incline since March, given the impact of reopening of lockdown conditions on production, logistics and sales.

The mood improved on the LME exchange later on in the day, helping to recover earlier declines. Aluminium found support at $2,390/t but struggled to gain momentum to break above yesterday’s close, as it edged back to close at $2,422.50/t. Aluminium scrap imports reached 124,600mt in June, up by 220% y/y, after customs have relaxed the inspection of imported material; but, overall, market tightness prevails. Copper shot up higher after finding support of $7,540/t to close at $7,637/t. Nickel has closed range bound at $21,813/t. LME and SHFE inventories continue to refresh the new lows, as material availability diminishes; the former is currently at 60,168mt – a multi-year low. Lead and zinc closed at $2,013/t and $3,054/t, respectively.

Oil futures rallied as exports of crude out of the US reached record highs, as it aims to fill the gap left by Russia. WTI and Brent now trade at $97/bl and $106/bl. Gold and silver steadied before the Fed decision, trading at $1,719/oz and $18.66/oz, respectively. Natural gas prices rallied once again after Gazprom cut supplies via its most important link to Europe to 20% of total capacity.

All price data is from 27.07.2022 as of 17:30

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