Key Macroeconomic Indicators for Base Metal Prices (2016-12-9)

SHANGHAI, Dec. 9 (SMM) – Attention should be on China’s economic data on Friday, including November’s inflation, aggregate financing for the economy and M2 supply growth, and US’s December Michigan consumer confident index. On Thursday’s night trading, euro dropped after European Central Bank introduced rate decision in December’s meeting while US dollar index increased, undermining base metals. But the decline, considering as market’s extreme reaction after unexpected incident, will not be sustainable and base metals are expected to see some upward corrections.

China’s new created yuan loans will rise in November due to rising enterprises’ loan demand for seasonal factors. Moreover, M2 growth is predicted to drop slightly on a yearly basis in November with high basis in same period of 2015.  

Base Metals to Diverge, SMM Says

China’s PPI growth, which will be released soon, is predicted to rise further to around 2% in November, supported by robust Chinese commodity market. Positive commodity market will continue to Q2 2017. So, PPI growth will enter rising track and is expected to advance to the highest level in February, 2017 before dropping back in the second half of 2017. CPI growth will expand slightly in November due to rising foodstuff price, such as vegetables.

US’s economy is improving according to its economic data released recently, mainly indicated by better employment market, rising inflation and strong manufacturing industry. In addition, US IBD consumer confident index was higher than expectation in December, strengthening chance of rising Michigan consumer confident index in December.