Key Macroeconomic Indicators for Base Metal Prices (2017-8-30)

SHANGHAI, Aug. 30 (SMM) – Crude oil inventory data in the US will be eyed today. Eurozone economic climate index, ADP’s employment in August for the US, revised core PCE goods price index and revised annualized Q2 GDP are due for release today. The US dollar overnight plummeted to an over 2.5 year low, but then rallied due to positive economic data, closing with gains. US economic data will guide the US dollar today. LME base metals outperformed SHFE base metals yesterday, closing with gains. SHFE base metals closed down overnight, except for lead. SHFE base metals are expected to hover at highs today, with divergence continuing.

Eurozone economy continues to recover, despite low inflation rate. Mario Draghi said at the annual meeting of central banks that inflation is not close to target yet, but will move toward the target, boosting market confidence toward eurozone economy. As such, eurozone economic and industry climate index will rise.

SMM Price Outlook for Base Metals on SHFE (Aug. 30, 2017)

US labor market maintains strong momentum. But economic outlook is uncertain due to sluggish economic indicators recently, unstable politics and falling US dollar. ADP’s employment in August for the US is expected to rebound further to 18.8, which will drive up the US dollar, otherwise, the US dollar index may fall below 92.

US July CPI and retail sales both grew, presaging consumer spending and business investment increased. The strong labor market bodes well for revised GDP and core PCE for the US. Core PCE for the US may remain at 0.9%, while annualized GDP may rise slightly.

NYMEX October crude oil fell below USD 46/mt yesterday due to a hurricane. API crude oil inventories for the week ended August 25 declined further by 5.78 million barrels. But gasoline inventories continued to grow, paring boost for oil prices. ZeroHedge reported gasoline futures closed at the highest in two years, and the market will eye how long the hurricane will affect the market. API data released today were not affected because the statistics had been made before the hurricane.