14 DECEMBER 2015AlCircle.com
Base metals decouple in china, with aluminium dominating the market
Edited by : AL CIRCLE
1 min read
The value of the US dollar has been dropping since February 2015. In October-November period it hit the lowest against the Euro before making a turnaround last week. Indices that compare the dollar against a basket of major currencies have reflected the same trend.
Metal prices typically follow an inverse relationship with the value of the dollar. When the dollar appreciates against other major currencies, metal prices tend to drop. When the value of the dollar weakens, metal prices generally go up.
This connection between base metals and US dollar index somewhat weakened in China. Although crude oil prices hit the lowest in nearly seven years to USD 37/bbl, and the US dollar index rebounded after touching low, SHFE alumininum closed up 3.36%. News on production cuts and stockpiling in Chinese aluminum market dominated domestic base metals market. Falling stocks in China’s major trading markets allowed SMMI.Al to gain 3.95%.
SMMI advanced 1.37%. Base metals will continue diverging from each other this week, with weak ones likely to draw some support from strong ones.
Metal prices typically follow an inverse relationship with the value of the dollar. When the dollar appreciates against other major currencies, metal prices tend to drop. When the value of the dollar weakens, metal prices generally go up.
This connection between base metals and US dollar index somewhat weakened in China. Although crude oil prices hit the lowest in nearly seven years to USD 37/bbl, and the US dollar index rebounded after touching low, SHFE alumininum closed up 3.36%. News on production cuts and stockpiling in Chinese aluminum market dominated domestic base metals market. Falling stocks in China’s major trading markets allowed SMMI.Al to gain 3.95%.
SMMI advanced 1.37%. Base metals will continue diverging from each other this week, with weak ones likely to draw some support from strong ones.
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