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The EU referendum vote and the shock decision by 52% of the UK’s population to leave caused immediate shock waves throughout global financial markets: European stocks, the British pound, euro and global share prices all plummeted in the immediate aftermath, whilst safe-haven assets such as gold and the dollar rocketed up. Yet the base metals complex seemed to register only a small bump from the event, recovered quickly and is now higher than it was before the vote. Why is this? The base metals complex has climbed 10% on average since January 1 on the London Metal Exchange. Zinc has been the star performer, up 28.0% to date, with tin in second at 16.4%. Lead is the only metal to have lost since January 1, down 1.2%, while nickel is up 7.0%. Copper is up 2.8% to date and aluminum 8.9%. Sentiment improving before the vote With market expectations leaning towards a remain vote in the week before the result, metals were moving in an upward direction largely due to improved sentiment rather than any apparent shift in fundamentals. Possibly because of short-covering in anticipation of a remain vote, Commitment of Traders showed speculative net short positions of copper on COMEX at record highs in the weeks preceding the announcement. In the week prior to the vote, copper was up 5.07%, aluminum 2.08%, nickel 3.88%, lead 1.59%, tin 1.35% and zinc 2.35%. The complex as a whole was up 2.70% on the week, basis LME data. Barclays drove home the point about weak fundamentals saying, “We stand by our call for mediocre copper import results in the coming months, as demand within China slows over the summer. Moderating copper imports will reduce the upward pressure on global prices,” on June 21, highlighting again that in their view this rally was not supported by demand-supply dynamics. “Tin is too high, I can see it coming down,” one tin trader told Platts on June 23. “There is too much material around right now, stocks are high, the market is pretty dead so I can’t see where the demand is, so I can see the metal falling,” expressing his belief that tin was now well above its fundamentals. Smaller than expected loss on ‘exit’ vote Then in the early hours of June 24, markets erupted worldwide as results started coming through. “We were looking for a correction in the [metals] market, but it is not as large as expected,” one trader said in the aftermath. This sentiment was echoed by others. “There’s not the ...