The end of another month and we note that the past week has seen positive gains with most base metals opening the June account higher than the May average. Perhaps off the back of positive manufacturing data in China (it’s certainly not going to hurt!), it’s also great to see that most traders are actively looking for material in the market.
**** DJ Goldman: China Smelter Closures To Tighten Aluminum — Market Talk ****
By Laura Clarke @ wsj.com
1257 GMT [Dow Jones] Goldman Sachs predicts that a crackdown on capacity will help tighten the aluminum market this year, and estimates that around 50% of Chinese output — equal to almost 25% of total world supply — is losing money. “Smelter closures in China will result in 2014 being the last year of the surplus,” says the bank. “The risks to this outlook remain how much further support Chinese smelters receive…however, the medium-term outlook for aluminium continues to be more constructive than it has for many years.” Adds Chinese output cuts are needed to see this rally continue, with bauxite prices likely to help place Chinese producers under further pressure at the margin.
**** DJ Base Metals up on Better China PMI Data — Market Talk ****
By Biman Mukherji @ wsj.com
0118 GMT [Dow Jones] Base metals are up Monday led by copper as China’s official manufacturing Purchasing Managers Index rises month-on-month in May. The PMI, issued Sunday, gains to 50.8 in May compared with 50.4 in April. A PMI reading above 50 indicates expansion in manufacturing activity, which is supportive of copper and other base metals as they have widespread industrial applications. China is one of the world’s biggest consumers of base metals.