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Base metal prices news: surviving the stress of the US Federal Reserve’s key rate hike

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Base metals price chart

On Wednesday, July 27, copper prices showed positive dynamics in London on hopes of strengthening demand for metals in China. The three-month LME copper contract rose 1.1% to $7,620 a ton by the close of trading, after falling to $6,955 a ton on July 15.

The overall market sentiment was bullish, boosted by positive US corporate reports that lifted the stock market.

Base metal prices news

According to Marex’s estimates, metal prices were supported by active short covering by speculators, who accumulated short positions and are now forced to make buybacks.

Meanwhile, copper inventories in ShFE warehouses and Chinese customs warehouses are at historic lows. Yangshan premium to the price of copper rose to $87 per ton, the highest value since December, indicating an increase in demand for imported metal.

Meanwhile, analysts at Citibank forecast that China’s economic recovery will stall and copper prices will fall to $6,600 a ton within 6-9 months. “We recommend selling copper and nickel in the coming week as a recession in Europe, a global economic slowdown and a serious supply increase move the commodities market into surplus,” the bank’s experts said.

Base metals price trends

According to economists polled by Reuters, a lot of key economies face the risk of a recession amid high inflation.

Current price of base metals: the cost of aluminum with delivery in 3 months at the LME did not change, amounting to $2,421.5 per ton. Zinc also remained unchanged at $3039/t. Nickel gained 0.8% to $21,750 per ton. Lead dropped by 0.2% to $2,020 per ton. Tin dropped by 1% to $24235/t.

In morning trading on Thursday, July 28, prices of most metals grew in London amid a weaker dollar, and prospects of less aggressive raising the key rate in the U.S., as well as optimism about China’s economic stimulus measures.

As, a three-month LME copper contract rose 1.8% to $777 per ton.

The U.S. Federal Reserve raised its key rate by 0.75% to curb inflation, which is in line with market expectations. Fed chief Jerome Powell’s comments after the rate hike are seen as “calmer,” prompting expectations of fewer possible base rate hikes in the remainder of the year.

Aluminum on the LME rose 1.6% to $2,460.5 per ton. Zinc with three-month delivery rose 2.4% to $3,126.5 per ton. Lead futures rose by 1% to $2,033 per ton. The price of nickel was down 0.4%, to $21730/t.

“More stimulus for [China’s] economy will help support confidence in the market in the short term,” said CRU Group copper market analyst He Tainyu. – However, pressure on prices will persist if China’s export market and real estate market remain in a weak position for a longer time.”

What is the base metals price outlook? The September copper contract rose 3% on the ShFE to 6,280 yuan ($8,937.65) per tonne.

Aluminum rose 4.1% to 18775 yuan per ton in Shanghai. The price of lead rose 0.7% to 15305 yuan per ton. Tin rose by 1.3%, to 195.23 thousand yuan per ton. Quotes on the price of nickel rose by 0.6%, to 169.06 thousand yuan per ton. These are base metals price trends we have today. 


Commodities

Canadian wildfire reaches Jasper, firefighters battle to protect oil pipeline

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(Reuters) -A wildfire reached the Canadian town of Jasper, Alberta on Wednesday, one of hundreds ravaging the western provinces of Alberta and British Columbia, as firefighters battled to save key facilities such as the Trans Mountain Pipeline, authorities said.

Wildfires burning uncontrolled across the region include 433 in British Columbia and 176 in Alberta, more than a dozen of them in the area of Fort McMurray, an oil sands hub.

The pipeline, which can carry 890,000 barrels per day (bpd) of oil from Edmonton to Vancouver, runs through a national park in the Canadian Rockies near the picturesque tourist town, from which about 25,000 people were forced to evacuate on Tuesday.

“Firefighters … are working to save as many structures as possible and protect critical infrastructure, including the wastewater treatment plant, communications facilities, the Trans Mountain Pipeline,” Parks Canada said in a post on Facebook (NASDAQ:).

The pipeline operator did not immediately respond to a Reuters request for comment, but said earlier it was safely operating the pipeline and had deployed sprinkler protection as a preventive measure.

In the day’s last update, Jasper National Park said it could not report on the extent of damage to specific locations or neighbourhoods, and that it would provide further updates on Thursday.

Canadian Prime Minister Justin Trudeau said his government approved Alberta’s request for federal assistance.

“We’re deploying Canadian Armed Forces resources, evacuations support, and more emergency wildfire resources to the province immediately – and we’re coordinating firefighting and airlift assistance. Alberta, we’re with you.”

The town, and the park, which draws more than two million tourists a year, were evacuated on Monday night, at a time when officials estimated there were 15,000 visitors in the park.

© Reuters. Smoke rises from the Lower Campbell Creek wildfire (K51472) wildfire northwest of Beaverdell, British Columbia, Canada July 24, 2024.   BC Wildfire Service/Handout via REUTERS.

Deteriorating air quality forced firefighters and others lacking breathing equipment to evacuate to the town of Hinton, about 100 km (62 miles) away, park authorities said on Facebook on Wednesday evening.

Officials of Parks Canada earlier said they expected rain to arrive overnight.

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Gold prices slide as safe haven plays favor yen; Copper losses deepen

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Investing.com– Gold prices fell in Asian trade on Thursday, seeing little safe haven demand despite increasing risk-off sentiment as traders rode a sharp appreciation in the Japanese yen. 

A rout in broader commodity markets also raged on, with copper prices extended a sinking to a near four-month low amid persistent concerns over top importer China. Weak readings on manufacturing activity from the U.S., Germany and Japan also soured copper’s outlook. 

slid 0.9% to $2,376.11 an ounce, while expiring in August tumbled 1.7% to $2,375.40 an ounce by 00:52 ET (04:52 GMT). 

Gold prices retreat as safe haven plays, rate hike bets favor yen 

The yellow metal saw little safe haven demand even as global markets experienced a sharp drop in risk appetite, with traders pivoting into the Japanese yen. The yen’s pair, which gauges the number of yen needed to buy one dollar, sank to an over two-month low on Thursday. 

The yen benefited from an unwinding in short positions over the past week, following suspected currency market intervention by Tokyo. But speculation over a potential interest rate hike by the next week also benefited the yen, especially as recent data signaled some resilience in the Japanese economy. 

Gold and metal markets took little advantage of a drop in the dollar, which retreated before a slew of key U.S. economic readings in the coming days. data for the second quarter is due later on Thursday, while data- the Federal Reserve’s preferred inflation gauge- is due on Friday. 

Other precious metals also retreated. slid 1.1% to $949.60 an ounce, while tumbled 4.2% to $28.098 an ounce, unwinding a bulk of their recent rally.

Copper losses deepen amid demand jitters 

Among industrial metals, copper prices fell further on Thursday, facing increased selling pressure amid concerns over a slowdown in global demand. 

Benchmark on the London Metal Exchange slid 1.6% to $8,960.50 a tonne- breaking below $9,000 for the first time since early-April. One-month fell 0.6% to $4.0540 a pound.

Both contracts were nursing steep losses in recent sessions, amid growing concerns over demand in top importer China, following a string of underwhelming economic readings from the country.

Concerns over a demand slowdown were furthered by weak manufacturing activity data from the U.S., Japan and Germany, which showed industrial activity was on the backfoot.

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Oil down $1 as muted Chinese consumption outweighs inventory draws

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By Noah Browning

(Reuters) -Oil prices fell on Thursday as demand signals from lacklustre Chinese consumption outweighed the previous day’s data showing large draws on U.S. inventories.

futures for September fell $1.01, or 1.2%, to $80.70 a barrel by 1117 GMT. U.S. West Texas Intermediate crude for September slid $1.2, or 1%, to $76.67.

Both benchmarks rose on Wednesday, snapping consecutive sessions of declines after the Energy Information Administration said inventories fell by more than expected to 3.7 million barrels last week. [EIA/S]

U.S. gasoline stocks dropped by 5.6 million barrels, against analyst expectations of a 400,000 draw.

“Despite draws in U.S. crude and gasoline stocks, investors remained wary about weakening demand in China and expectations of advancing ceasefire talks between Israel and Hamas added to pressure,” said Hiroyuki Kikukawa, president of NS Trading, owned by Nissan (OTC:) Securities.

China’s oil imports and refinery runs this year have trended lower than in 2023 on weaker fuel demand amid sluggish economic growth, government data shows.

“Growing concerns over the strength of oil demand in the short to medium term have acquired a strong grip on market sentiment,” said Vandana Hari, founder of oil market analysis provider Vanda (NASDAQ:) Insight.

In the Middle East, efforts to reach a ceasefire deal to end the war in Gaza between Israel and militant group Hamas have gained momentum over the past month. A breakthrough could erode lingering threats to supply and send prices lower.

The U.S. Federal Reserve, meanwhile, is expected to cut interest rates only twice this year, in September and December, according to a Reuters poll of economists, with resilient U.S. consumer demand prompting a cautious approach despite easing inflation.

© Reuters. FILE PHOTO: An aerial view shows a crude oil tanker at an oil terminal off Waidiao island in Zhoushan, Zhejiang province, China January 4, 2023. China Daily via REUTERS/File Photo

Lower interest rates should spur economic growth, leading to more oil consumption.

In Canada, hundreds of wildfires are burning in the western provinces of British Columbia and Alberta, including in the area of oil sands hub Fort McMurray.

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