Key Macroeconomic Indicators for Base Metal Prices (2017-7-10)

SHANGHAI, Jul. 10 (SMM) – On Monday, attention should be on China’s CPI and PPI in June, M2 money supply, eurozone’s Sentix index of consumer sentiment in July and US’s change in labor market conditions index in June. Oversupply concerns sent crude oil price down last Friday. US dollar index remains slight range-bound trading. Base metals will be divergent on Monday with most metals closing with losses and lead and zinc staying firm.

China’s CPI is expected to hold growth at 1.5% in June after a 3-month rises since February 2017. Agricultural products market, including egg and pork, shows oversupply, and Ministry of Commerce forecasts prices of pig and pork will increase steadily in the second half of year, leading to no inflation throughout the year. In China’s official manufacturing PMI in June, purchasing price index of raw material, returning upward territory, registered a month-on-month growth, and index of ex-works price also stopped a 3-month consecutive decline, and price index also rose in the month. Hence, PPI is expected to stop falling in June.

SMM Price Outlook for Base Metals on SHFE (Jul. 10, 2017)

China’s aggregate financing to the real economy will rise to RMB 1.4 trillion in June, and M2 money supply will be flat at 9.6% YoY. M2 money growth has been low since starts of deleverage, tightening money supply, also slashing credit creation ability at banks, which adds pressure on real economy.

Eurozone’s Sentix index of consumer sentiment will drop to 28.05 from 28.4 in July, but this will make limited impact on euro as eurozone’s economy will remain stable increase in a long term.

US’s change in labor market conditions index will increased in June, and US’s labor market is close to full employment, based on low unemployment rate and higher-than-expected growth in nonfarm payrolls.