Key Macroeconomic Indicators for Base Metal Prices (2016-6-1)

SHANGHAI, Jun. 1 (SMM) –Manufacturing PMI from major economic will come under the spotlight today.

China’s official and Caixin manufacturing PMI for May are expected to hold flat with April’s figure or fall from April. This is mainly because steel prices and nonferrous metals prices fell back from highs in late April, which will not only drag down PPI, but also accelerate destocking. Finished product stocks at industrial enterprises posted negative growth for the first time in nearly 7 years in Aril. 

US final manufacturing PMI will fall from April in May. Markit’s preliminary US manufacturing PMI hit a 7-year low of 50.5 in May. New York Fed manufacturing index fell to -9 in May. Philadelphia Fed manufacturing index also dropped from 13.5 to 4.6. Richmond manufacturing index fell to a 7-month low of -1. These negative figures suggest a good chance for US final manufacturing PMI to be negative as well in May.     

The euro zone’s final manufacturing PMI will remain low in May, mainly because preliminary manufacturing PMI dropped to a 3-month low and France’s preliminary manufacturing PMI also missed forecast. Even if Germany’s final manufacturing PMI remain positive in May, the euro zone’s final manufacturing PMI has little chance to rise.

Falling shale oil output in the US triggered optimism over crude oil supply-demand picture. However, USD 50/bbl level will prove big resistance. The 169th OPEC meeting to be held on June 2 will offer direction for crude oil price movement.