ETFS Commodity ETP Weekly …
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ETF Securities Research
Industrial metals received a boost last week, driven by better than expected Chinese export data and the brand-new stimulus package approved by the Japanese government. Japan is the fifth biggest consumer of copper and the new stimulus plan is likely to help lift demand for industrial metals from the country. Gold saw outflows last week, as the European Central Bank decided not to cut rates further. Although the ECB did not cut rates, President Draghi confirmed that euro area economic weakness will persist through 2013, spurring investors’ hopes that policy makers will do more to stimulate growth in the region.
ETFS Copper (COPA) receives US$46m of inflows on Japanese stimulus plan and strong Chinese export data. This was the biggest weekly inflow into copper since September 2012. Chinese exports grew by 14.1% in December, the most since May, adding to evidence the economy is on the mend. On Friday, Japan’s president Abe announced his intention to pursue a 10.3 trillion yen programme to reverse deflation and boost growth in the country. Japan is the fifth biggest consumer of copper and the new stimulus plan is likely to help lift demand for industrial metals. At the same time, ETFS Industrial Metals (AIGI) also received strong inflows, totalling US$17.7m, as investors anticipated a pick-up in China and US business cycle.
Gold ETCs registers US$74m of outflows . The gold price fell below US$1,670oz on Friday after climbing 1.6% week-on-week following the ECB meeting on Thursday. Although rates were not cut, President Draghi confirmed that the euro area economic weakness will persist through 2013. The euro appreciated on the news, driving the gold price up.
Platinum ETCs receive US$4.8m of inflows on potential closure of platinum operations in South Africa. Amplats is due to release a review of its strategic operations in the coming weeks. The closure of some mines could have a substantial impact on platinum prices, as markets are already expecting a 486koz deficit this year. Strong auto sales in China also helped improving the outlook for palladium ETCs that recorded US$1.7m of inflows last week. Sales of vehicles in the biggest auto market increased by 7.1% in 2012 and are expected to grow even further as the new government aims at expanding domestic demand.
WTI oil ETCs see US$33.2m of outflows on persistently high stock levels at Cushing, Oklahoma, and output increase. Despite the accelerated oil demand envisaged by the EIA in its latest report last week, ETP investors are becoming more negative on WTI due to the continuing supply issues. In contrast, Brent oil ETCs received US$6m of inflows last week, as Saudi Arabia cut its oil production to the lowest level since May 2011. The largest slump in natural gas stockpiles in two years attracted another US$10m into ETFS Daily Leveraged Natural Gas (LNGA) last week. The recent weakness in price has reawaken investors’ interest as this might prompt further utility switching in the future, boosting demand for gas.
Key events to watch this week : US, China and Japan industrial production growth. With the US and China showing renewed strength, investors will be closely monitor those indicators to assess the extent of their recovery. Positive numbers will likely boost industrial metals, and also platinum, palladium and silver might benefit. EU27 new car registrations will also be looked at closely, as one of the main demand drivers of platinum.
Source: ETFWorld.co.uk
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