All eyes are on China rather than the US – Commerzbank

Chinese data to be released in the next two weeks will likely be decisive for base metals, notes Barbara Lambrecht, commodities strategist at Commerzbank.

Some of the sentiment towards China is already priced into base metals

“More than Monday’s inflation data, Tuesday’s foreign trade data is likely to be particularly important. In addition to exports of aluminum and steel products, the focus will be on imports. While copper ore imports have weakened somewhat recently, which could also be due to seasonal factors, iron ore imports have steadily increased.”

“However, given the recent decline in steel production and the continued build-up of inventories at Chinese ports, we continue to expect imports to decline in the near term. A look at Australian exports in July suggests a decline in August, at least on that side. The focus will also be on China’s credit growth figures to be released later this week.”

“Credit growth figures have been weak in recent months, with the latest figure showing credit growth of just around 8%, the slowest on record. If the numbers disappoint again, this is likely to continue to weigh on sentiment and expectations for the future development of China’s construction and manufacturing sectors. Overall, a good portion of the negative sentiment towards China is likely already priced into the base metals. Therefore, positive surprises are likely to have a greater impact on prices than other weak data.”