Industrial metals: Calm trading is expected this week.

In China, the markets are closed this week for the New Year celebrations (the New Year takes place tomorrow and the "Year of the Tiger" begins). Therefore, the metal markets should be quieter this week, after last week was characterized by large fluctuations. Copper posted its biggest weekly loss since last October, down 4.4%. It starts the new trading week almost unchanged at USD 9,500 per ton. The other industrial metals are all slightly weaker, nickel gives a little more. Yesterday, the purchasing managers' indices for the manufacturing sector (PMI) in January were published in China. While the official PMI just barely held in expansionary territory, the one compiled by Caixin fell to 49.1, the lowest reading since February 2020, i.e. the outbreak of the coronavirus in China.

Lower export demand and weak domestic demand in the wake of strict anti-corona measures probably played the main role. Our economists expect the Chinese central bank to cut its key interest rates again in the second quarter in order to give the economy a helping hand. This may prevent a sharper decline in metal prices today. After rising at times to a 5-month high of over $147 per ton on Friday, iron ore prices are down more than 7% today to just over $135. China's National Development and Reform Commission announced Friday evening that it will crack down on speculation following the sharp rise and "unusual" movements in iron ore prices, and is considering measures to ensure smooth operation of iron ore prices. This is not the first time Chinese authorities have intervened in iron ore trading.

Source: Commerzbank Research, Photo: Fotolia