Chinese PMI Imposes Limited Influence on Base Metals Last Friday-Shanghai Metals Market

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Chinese PMI Imposes Limited Influence on Base Metals Last Friday

SMM Insight 01:30:48PM Feb 04, 2013 Source:SMM

SHANGHAI, Feb. 4 (SMM) – Base metals started slightly down last Friday on profit-taking, and long investors became more eager to close positions following China's disappointing official manufacturing PMI for January. However, expectations over the US non-farm payrolls report due Friday evening still lent some support to base metals prices.

Data revealed that China's official PMI was 50.4% in January, despite above the 50 mark, still down 0.2 percentage point from the previous month, and ending the increase for five consecutive months. The PMI rose 0.2% to 51.3% at large enterprises, but dropped 0.2% and 1.9% to 49.7% and 46.2%, respectively, at medium and small enterprises.

However, in contrast with the official PMI, the final reading of HSBC China manufacturing PMI increased to 52.3% in January. This kept base metals fluctuating near previous trading range.

The table below highlights the official PMI and the detailed situations. With the Chinese New Year holiday drawing near, production slowed, employers took the holiday off. New export order index slipped sharply, but domestic enterprises were still willing to purchase raw materials with relatively high prices. This will boost market confidence over post-holiday output and sales, a key factor that helped base metals merely register a limited decline last Friday. Moreover, the NBS said in the report the sub-index for business activity expectations in January was 55.9% and that manufacturing enterprises are upbeat about business activity for the next three months.

 
Official PMI
Output Index
Employment Index
New Order Index
New Exports Order Index
Raw Material Stock Index
Purchasing Price Index
Jan. 2013
50.4
51.3
47.8
51.6
48.5
50.1
57.2
Dec. 2012
50.6
52.0
49.0
51.2
50.0
47.3
53.3
Sources: NBS, SMM

China's central bank conducted RMB 100 billion 7-day reverse repurchases on January 30, in line with SMM's anticipation. China's cash flows are expected to remain sufficient ahead of the holiday, which should be positive for base metals.

Investors were also optimistic over other economic figures released in the US and Europe last Friday, but owing to strong market interest in profit-taking, investors turned cautious towards keeping up with rising prices during the Asian trading hours.

 

Chinese PMI Imposes Limited Influence on Base Metals Last Friday

SMM Insight 01:30:48PM Feb 04, 2013 Source:SMM

SHANGHAI, Feb. 4 (SMM) – Base metals started slightly down last Friday on profit-taking, and long investors became more eager to close positions following China's disappointing official manufacturing PMI for January. However, expectations over the US non-farm payrolls report due Friday evening still lent some support to base metals prices.

Data revealed that China's official PMI was 50.4% in January, despite above the 50 mark, still down 0.2 percentage point from the previous month, and ending the increase for five consecutive months. The PMI rose 0.2% to 51.3% at large enterprises, but dropped 0.2% and 1.9% to 49.7% and 46.2%, respectively, at medium and small enterprises.

However, in contrast with the official PMI, the final reading of HSBC China manufacturing PMI increased to 52.3% in January. This kept base metals fluctuating near previous trading range.

The table below highlights the official PMI and the detailed situations. With the Chinese New Year holiday drawing near, production slowed, employers took the holiday off. New export order index slipped sharply, but domestic enterprises were still willing to purchase raw materials with relatively high prices. This will boost market confidence over post-holiday output and sales, a key factor that helped base metals merely register a limited decline last Friday. Moreover, the NBS said in the report the sub-index for business activity expectations in January was 55.9% and that manufacturing enterprises are upbeat about business activity for the next three months.

 
Official PMI
Output Index
Employment Index
New Order Index
New Exports Order Index
Raw Material Stock Index
Purchasing Price Index
Jan. 2013
50.4
51.3
47.8
51.6
48.5
50.1
57.2
Dec. 2012
50.6
52.0
49.0
51.2
50.0
47.3
53.3
Sources: NBS, SMM

China's central bank conducted RMB 100 billion 7-day reverse repurchases on January 30, in line with SMM's anticipation. China's cash flows are expected to remain sufficient ahead of the holiday, which should be positive for base metals.

Investors were also optimistic over other economic figures released in the US and Europe last Friday, but owing to strong market interest in profit-taking, investors turned cautious towards keeping up with rising prices during the Asian trading hours.