Opening bell: Base metals market update

Most Shanghai Futures Exchange (SHFE) and London Metal Exchange (LME) base metals closed with losses on 8 July 2022 on spurring concerns about potential lockdowns after Shanghai reported the first case of the highly infectious BA.5 omicron sub-variant yesterday.

China's policies could eventually halt the bear market in metals, (local governments to sell RMB 1.5 trillion ($220 billion) of special bonds in the second half. This potential boost for infrastructure spending will likely be used to plug Covid-era budget gaps, and may witness recovery in metals demand.

Base metals had their worst (June) quarter since 2008. Copper plunged briefly below $7,500/t in intraday trading last week, the lowest since late 2020, and down about 30% from the March 2022 record, as per data maintained with SteelMint.

Notably, copper output at Peru's huge Las Bambas mine has returned to normal levels after a two-month shutdown due to protests which ended last month, sources and power usage data show, but talks over a deal with community leaders have stalled, threatening more tensions.

Base metal market performance on last trade-

LME copper slid 1.1%, aluminium dipped 0.16%, lead dropped 2.38%, and zinc fell 0.96%.

SHFE copper slid 0.8%, aluminium grew 0.27%, lead dropped 0.57%, and zinc fell 0.28%.

MCX copper , aluminum, zinc and lead prices were almost stable on the last trading day.

Stocks

The LME warehouse stocks of all base metals on a d-o-d basis fell by up to 2% on last trading session. Moreover, copper stocks fell 2,325 tonnes (t) d-o-d on 8 July.

Oil down on demand concerns

Brent oil futures fell 1.33% to $106.44 and crude oil WTI futures declined 1.63% to $103.88 at the time of reporting. The investors are worried about oil demand as Shanghai discovered the first case of the highly infectious COVID-19 (omicron sub-variant) on 10 July, as per reports.

Currency exchange

The Indian currency ended trading at 79.42 against the US dollar in early morning today tracking the strength of the American currency.

The US dollar index is currently at 106.80, hovering nearly 2-decade highs on rising inflation.