Monthly Metal Review
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Overview (November 2015)
The Federal Reserve signaled that it is likely to raise U.S. interest rates in mid-December if job-growth and inflation trends don’t falter. A 0.2-percent October consumer-price rise and a robust November employ-ment report added upward pressure.
The U.S. added 271,000 jobs, topping an ex-pected 185,000. The unemployment rate fell to 5.0 per-cent, from 5.1 and the best since 2008. A November copper selloff came as the U.S. dollar reached a 12-year high on rate-rise expectations. Moody’s said metals’ hard times will likely worsen through 2016. Slowing growth in China and Brazil, muted conditions in Eu-rope and plodding U.S. recovery will pressure global base-metal prices, the ratings agency warned.
Moody’s said base-metal prices won't change much over the next 12-to-18 months, and could face downside risk. Goldman Sachs warned that base-metal prices would stay low or fall further without higher demand or production cuts.
European Central Bank President Mario Draghi signaled new economic stimuli to come in early De-cember, saying normalizing lagging inflation could take longer than thought.
UK unemployment fell to a seven-year low of 5.2 percent in the third quarter, the best since 2008. Some 31.21 million people were working, up 177,000 on-quarter. Employee earnings, including bonuses, rose 3 percent on-year. Teck Resources said it will cut 9 percent of its workforce through attrition and layoffs on low commodity prices. The 1,000-position cuts include senior management and should bring global reductions to 2,000 in 18 months. The Canadi-an miner expects to eliminate C$650 million (US$488 million) in 2016 spending.
Cheap, oversupplied oil will likely continue through this decade, not reaching US$80 a barrel until 2020 or later, the International Energy Agency (IEA) said. Demand should rise less than 1 percent yearly until 2020. The IEA forecast oil-demand growth al-most halting then, rising 5 percent in the next 20 years. The UK’s Department of Energy and Climate Change slashed its 2020 wholesale-gas-price estimate by 14 percent.
Eurozone business activity grew in November as a weak euro and price cuts helped boost export orders. But low inflation is still a policy problem.
Trade volumes on the London Metal Ex-change (LME) fell 3 percent on-year in 2015’s first nine months on slowed global growth and weak commodity prices. But owner Hong Kong Exchanges & Clearing’s (HKEx) third-quarter results showed overall profit surged 80 percent.
Third-quarter Eurozone economic growth had slowed on-quarter to 0.3 percent, from 0.4 percent, whilst Germany slowed from 0.4-percent expansion to 0.3 percent growth, hindered by weaker interna-tional trade.