Base Metals Diverge Noticeably (Oct. 17-21, 2016)

SHANGHAI, Oct. 21 (SMM) – Market expectations of a Fed rate hike in December increased due to upbeat economic indicators from the US. The European Central Bank left rate unchanged at October policy meeting, pushing down the euro. The US dollar rose to 98.564, and NYMEX oil prices reached the highest for the year of USD 52.22/bbl. Central parity of the yuan against the US dollar fell below 6.75, leaving SHFE base metals stronger than LME base metals.

Base metals diverged this past week. Copper, aluminum and nickel were weak, while lead, zinc and tin surged. The SMMI.Zn rose 2.32%, and SMMI.Sn increased 1.58%. The SMMI.Pb climbed 1.28%

SMMI.Ni slid 1.27%, and the SMMI.Al dropped 0.85%. Copper futures hovered at lows. Cargo holders held premiums firm, and traders purchased actively, allowing prices to claw back some gains. The SMMI.Cu slipped 0.66%。 The SMMI remained flat this week. Base metals will continue to diverge next week given strong US dollar and yuan’s further devaluation.