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United States Market Snapshot & Commodities On The Move

Giant Ore Truck at Bingham Kennecott Copper Mine

Washington, DC – US futures rose on Monday, attempting to recover from last week’s massive losses, which saw the S&P 500 post its worst performance since June and the Nasdaq post its worst performance since July.

Traders continue to analyze evidence of slowing growth in the face of the spread of the coronavirus delta variant, uncertainty over when the Federal Reserve would begin cutting asset purchases, and concerns that supply disruptions will weigh on corporate profitability.

Tomorrow’s CPI data will provide additional insight into inflationary pressures, while retail sales and industrial output statistics anticipated later this week will provide an update on the American economy’s recovery.

Commodities, and particularly base metals, closed strongly last week, shrugging off China’s weaker-than-expected PMI result. A weaker dollar and dovish rhetoric from the Federal Reserve’s Jackson Hole meeting aided the recovery.

The dollar index rose to 92.7 on Monday, the highest level in three weeks, continuing a 0.6 percent increase last week, the greatest performance in three months. Traders remain cautious and steer clear of riskier currencies in the face of mounting uncertainty about the Fed’s tapering.

After a poor payrolls report, some investors pushed back expectations for when the Fed will begin tapering, but several Fed members have advocated for reduction to begin this year. Economic data due out this week, including the CPI, retail sales, and industrial production, will provide an update on the state of the American economy.

1. Aluminum

Aluminum Breaks the $3,000 Barrier for the First Time in 13 Years

Aluminum futures surpassed $3,000 per ton for the first time since July 2008, on supply concerns and hopes that demand will continue to grow. Chinese output has decreased as the country has slowed smelting in order to reduce pollution and achieve green standards, while supply has been further interrupted by a military coup in Guinea, the world’s second largest producer of bauxite and China’s largest supplier.

Elsewhere, smelters in the European Union are facing increased prices due to record-high carbon credits and power inputs. Aluminum prices have already increased by more than 50% this year.

Bylt: sees an upside bias in aluminum pricing due to the long list of supply disruptions in China and growing concerns about the trajectory of future supply growth in the face of increasingly severe energy and emissions target evaluations.

2. Copper

According to preliminary data from China Customs, August saw significant weakening in Imports of copper by China.

Imports of unwrought copper and products fell for the sixth consecutive month, at 394kt, the lowest monthly amount since June 2019. They were also down 7% month over month and 41% year over year. Imports totaled 3.61Mt between January and August 2021.

Copper prices have fallen, driven down by reduced supply risk in Chile as a result of recent mine wage talks and softening Chinese import demand. Two primary unions at the Andina mine’s 185 thousand tonnes per year (ktpa) capacity terminated their strike in mid-August by agreeing to a new wage agreement last week. Additionally, an agreement was reached over the weekend at Chile’s 127ktpa Cesarones mine, bringing an end to a strike that began in early August. Meanwhile, an early agreement was achieved on 1 September at Chile’s 443kt El Teniente mine after mine workers rejected the prior offering in mid-August.

3. Gasoline

Increase in Gasoline Prices

Due to supply difficulties in the Gulf of Mexico following Hurricane Ida, US gasoline futures have shot above $2.1 a gallon. Last week, the EIA Petroleum Status Report revealed that gasoline inventories in the United States declined by 7.215 million barrels in the week ending September 3rd, the greatest decline since the first week of March and exceeding market expectations of a 3.39 million barrel decline.

Simultaneously, fears about decreasing economic development and an increase in coronavirus cases globally offset the improvements. We are anticipating Asphalt emulsion related production and shipping issues as well.

4. Crude Oil

Brent oil futures were higher on Monday, reaching a six-week high of $73.9 a barrel, as supply problems in the US Gulf of Mexico continue and investors await new demand predictions from OPEC and the International Energy Agency.

Almost half of crude production in the US Gulf of Mexico has yet to be restored following Hurricane Ida, and its timing is unknown. Meanwhile, OPEC is anticipated to release its monthly supply and demand report later today, and the International Energy Agency’s prediction is due tomorrow.

5. Lumber

Lumber has been tracking higher as futures shot back above $600. Data from the U.S. Census showed a huge jump of 31.9% in sales of lumber. Inventories of wholesale lumber were stronger up 42.6% year over year as we see a lower price at the retail level.

Markets and backlogs continue to mount, gold is stuck, and the U.S. dollars has been rebounding the past few days pointing to stronger lumber orders and a rise in Lumber.

Ahead of the Week

This week, the US and UK will release significant inflation statistics, with investors eager to see if recent price pressures have abated during the economic slump.

Apart from that, key data to monitor include retail sales and industrial production figures from the United States and China, as well as employment data from the United Kingdom and Australia.

The Eurozone and Japan will release foreign trade figures, while New Zealand will release its second-quarter GDP growth figures.

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