Chinese PMI Imposes Limited Influence on Base Metals Last Friday

Feb 04, 2013 05:30 GMT Source:SMM

Summary:Base metals started slightly down last Friday on profit-taking, and long investors became more eager to close positions following China's disappointing official manufacturing PMI.

SHANGHAI, Feb. 4 (SMM) – Base metals started slightly down last Friday on profit-taking, and long investors became more eager to close positions following China's disappointing official manufacturing PMI for January. However, expectations over the US non-farm payrolls report due Friday evening still lent some support to base metals prices. Data revealed that China's official PMI was 50.4% in January, despite above the 50 mark, still down 0.2 percentage point from the previous month, and ending the increase for five consecutive months. The PMI rose 0.2% to 51.3% at large enterprises, but dropped 0.2% and 1.9% to 49.7% and 46.2%, respectively, at medium and small enterprises. However, in contrast with the official PMI, the final reading of HSBC China manufacturing PMI increased to 52.3% in January. This kept base metals fluctuating near previous trading range. The table below highlights the official PMI and the detailed situations. With the Chinese New Year holiday drawing near, production slowed, employers took the holiday off. New export order index slipped sharply, but domestic enterprises were still willing to purchase raw materials with relatively high prices. This will boost market confidence over post-holiday output and sales, a key factor that helped base metals merely register a limited decline last Friday. Moreover, the NBS said in the report the sub-index for business activity expectations in January was 55.9% and that manufacturing enterprises are upbeat about business activity for the next three months. Official PMI Output Index Employment Index New Order Index New Exports Order Index Raw Material Stock Index Purchasing Price Index Jan. 2013 50.4 51.3 47.8 51.6 48.5 50.1 57.2 Dec. 2012 50.6 52.0 49.0 51.2 50.0 47.3 53.3 Sources: NBS, SMM China's central bank conducted RMB 100 billion 7-day reverse repurchases on January 30, in line with SMM's anticipatio......