Crude oil: U.S. President Barack Obama on Tuesday banned new oil and gas drilling in federal waters in the Atlantic and Arctic Oceans, in a push to leave his stamp on the environment before Republican Donald Trump takes office next month.
COPPER: Committee of Statistics under Ministry of National Economy of the Republic of Kazakhstan said Tuesday the country’s refined copper output increased 3.7% year-on-year in the first eleven months of this year, wenhua.com reported.
ZINC & LEAD: Fujian Province will strictly implement pollution control and treatment at major lead-zinc and copper ore exploration areas before late 2018, cnmn.com reported.The province will release emission limit implementation plan for major pollutants and decide companies to be majorly supervised before the end of 2017.
I get it, you are thinking of what you are going to get your family for Christmas. However, Santa is bringing you good opportunities to buy some metals. Don’t miss them.Reason for bull market: Base metals entered bull market earlier this year. The real driver of this bull market has been the stronger-than-expected Chinese demand. Markets underestimated Beijing’s determination not to disappoint on its growth numbers. Thanks to the country’s increase in infrastructure spending, industrial metal prices are getting a tailwind.
The metals rally particularly extended in November. However, prices don’t just move in a straight line. If they move up quickly, buyers are tempted to take their profits until markets digest those gains. This is normal price action and why we normally see prices moving in a zig-zag. In the second half of December, there’s already been some profit taking and as prices pull back, buyers can find good opportunities to time some purchases.
Let’s take a few examples:
COPPER: Almost no analyst was bullish on copper prior to this rally, but it seems that the market now sees the possibility of a market deficit next year as almost no supply is due to come on-stream while demand seems robust.
Copper prices exploded in November. After this stellar rally it was normal to expect some selling pressure. However, if the bulls are still in control, they should come back to support prices soon. If prices start to rebound from these levels, copper buyers will find a good opportunity to buy some volume.
ZINC: According to the International Lead and Zinc Supply Group, the global market for refined zinc metal was in deficit by 277,000 metric tons from January to October 2016 with total reported inventories falling by 53,000 mt over the same period. The Group anticipates that global usage in 2016 will exceed production by 349,000 mt and expects the market to remain in a deficit of 280,000 mt next year.
During this year’s rally, zinc buyers had several opportunities to buy forward. Buyers now need to pay close attention to the recent price pull back. If you see a rebound in prices near that support level, that would be a good time to buy some volume.
LEAD: Zinc’s cousin, lead, is also retracing near an area where we should see investors coming in to support prices. If this year’s bull market is set to continue, which for now we continue to expect it to do so, lead buyers will find a good opportunity to time their purchases if prices rebound at these levels.
NICKEL: The Philippines’ output of nickel ore fell 16% in the third quarter from a year earlier, as a result of several mine suspensions due to environmental violations. The country has already stopped work at 10 of its 41 mines, eight of which are nickel mines. 20 More mines, 14 of which mine nickel, could see their licenses suspended. In December prices are retracing, but if this uptrend is to continue investors will likely find these levels attractive to buy nickel, lifting prices.
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