December 6, 2021 – Commodity markets started the week with movement. The news tennis is exciting, as it tries to influence market sentiment – sometimes in the negative, sometimes in the positive direction. Overall, however, the figures look positive. And it is again worth looking not only at the headlines, but also at the actual text of some press releases. And the European Commission has taken the necessary steps to lift the punitive tariffs against the United States on 1 January 2022.

Markets start the week with movement
Markets start the week with movement

Commodity markets start with movement

Copper lost slightly last week, pricing in the omicron variant of the Corona virus in South Africa. At the same time, copper is gaining momentum on the LME, as the operating company of the Peruvian Las Bambas copper mine, MMG Ltd, had still announced on Friday that it would have to close the mine in mid-December. Problems with a blocked road were cited as the reason. This had fuelled concerns about a growing copper shortage in the market and kept copper prices stable on SHFE and also LME.

Prices for Chinese coal contracts to rise

Prices for Chinese long-term coal contracts are expected to rise by up to 31% in 2022. This is according to several Chinese media reports. According to these reports, a proposal to this effect has been made by the government and the coal association.

Chinese aluminium prices stable

Due to the announcement that energy costs are to rise in 2022, aluminium prices in China are holding steady and firm.

Aluminium stocks on the LME at 14-year low

Stocks on the European LME have fallen by over 55% since March 2021, hitting a 14-year low.

Movement on the commodity exchanges

Some movement is seen on the SHFE and LME on Monday, likely due to sometimes conflicting news from the media.
News tennis on the markets

While in Germany the Omikron variant is still being pushed through all channels as a horror headline, more reassuring words are coming from South Africa. An article in the South African Medical Research Council suggests that the symptoms of Omicron are milder than those of the other virus variants. In addition, the patients hospitalised so far usually have pre-existing conditions, so-called comorbidities.

Even though the data on Omicron is not yet complete, the markets are reacting to positive news. Does a mild Omikron variant also mean a U-turn towards “buy everything“.

Asian markets somewhat more cautious

As expected, the Asian markets, which were more heavily burdened by the delta variant, are behaving somewhat more cautiously until more precise findings on Omikron are available.

Slump in industry orders in Germany?

According to the German Federal Statistical Office, new orders in the manufacturing sector fell by 6.9% in October compared to the previous month.

If one leaves this uncommented, it naturally looks like a drastic slump, which of course is also readily picked up as a negative headline in the media.

Orders in Germany up by over 20%

However, if you look at the figures from January to October 2021, Germany has seen an increase in orders of over 20% compared to the same period last year. Also, the order intake in October 2021 is higher than that in October 2019. Moreover, the current value is also about 1.7% higher than before the official outbreak of the Corona pandemic in Germany in February 2020. All in all, positive values after all.

Positive business outlook for December 2021

The IHS Markit Purchasing Managers Index also shows a positive business outlook for December 2021 for the first time since September 2021, despite tight availability of raw materials and intermediate goods.

EC lifts punitive tariffs against United States

As expected, the European Commission last week published the necessary regulation to lift the punitive tariffs against the United States. This should no longer stand in the way of the introduction of a US quota system on steel and aluminium imports from Europe on 1 January 2022. The impact on the European market should remain limited after a look at the negotiated quotas.

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