Today in early trading, commodities exploit slightly better mood and post small gains - Brent crude climbs to 109 USD per barrel. China’s official manufacturing PMI showed slight improvement and the overall index returned back above 50 points (i.e. now indicates expansion). Nevertheless, (497,5 GBp, 1,31%) PMI index somehow blurred the picture as it remained below 50 points in December 2011 – China’s companies reported accumulation of stocks for the first time since July 2010.
Apart from the demand factors, rising Middle East tensions could support the price of oil in weeks ahead – Iran said it tested what it described as two long-range missiles at the end of 10-days naval exercise and warned it could shut the Straight of Hormuz which is a part of the key oil-shipping route. Nevertheless, US officials stated previously they would not ignore such a step. Except for that, by closing the Strait, Iran would hurt its own economy which is the world’s fourth largest crude producer and is therefore heavily dependent on oil revenues.
Base metals also draw support from better China’s data and post some gains in the first session of 2012 (yesterday, the LME was closed). Aluminium is thus trading slightly above 2000 USD per ton (USD/t) and copper opened above 7600 USD/t.
As far as the 3-month lasting strike at the world’s no. 2 copper mine - Indonesian Grasberg - is concerned, workers delayed their return to job as a part of workers still has some issues to be solved. Nevertheless, company expects to ramp up the production to full scale in early 2012.