Key Macroeconomic Indicators for Base Metal Prices (2017-8-9)

SHANGHAI, Aug. 9 (SMM) – US oil inventories, China’s annualized July CPI, PPI, M2 supply and US June wholesales inventories will be eyed today. The US dollar rose overnight thanks to June JOLTs and non-farm employment, and may rise further. SHFE and LME base metals closed with gains across the board, and extended gains due to the earthquake in Sichuan province. But tin was weak and may experience corrections in the near term.

China’s July trade data topped market expectations. But import and export data were lackluster. Overall, China’s economy is still steady, and will unlikely see deflation or stagnation. As such, China’s annualized July CPI and PPI may remain steady.

China’s new RMB loans were RMB 1.54 trillion in June, compared to RMB 1.11 trillion in May, topping market expectations. China’s M2 supply rose 9.4% YoY in June, lower than 9.6% in May, slowing for 5 months in a row. Bank of Communications reported July M2 growth may rebound, leaving liquidity steady. New RMB loans fell on the month in July. Debt swap increased noticeably and may drag down loans by enterprises. Low cross border capital outflows and likely recovery in direct financing market may push up M2 growth. China’s July M2 supply is expected to be 9.5%.

US June CPI and retail sales fell short of market expectations, so US whole sale inventories final figures in June may hold flat at flash data.

API crude oil inventories fell sharply due to lower imports and output growth at refineries. But gasoline inventories unexpectedly increased. Oil prices rose briefly but then fell. Market players diverge on oil price outlook. If EIA oil inventories fall, market confidence will improve, and vice versa.