Monday, April 13, 2015

How will El Niño effect Base Metals Market this year ?

How will El Niño effect Base Metals Market this year ?
El Niño has arrived, according to a report released by the National Oceanic and Atmospheric Administration (NOAA) in early March.

What is El Niño?
El Niño is the warm phase of the El Niño Southern Oscillation (commonly called ENSO) and is associated with a band of warm ocean water that develops in the central and east-central equatorial Pacific (between approximately the International Date Line and 120°W), including off the Pacific coast of South America.

El Niño Southern Oscillation refers to the cycle of warm and cold temperatures, as measured by sea surface temperature, SST, of the tropical central and eastern Pacific Ocean.

How will El Niño effect Metals Market this year?
“Extreme weather related to El Niño, such as floods or droughts, will be a big threat to production in world’s major metal producing countries, including Chile, Peru, Indonesia. Supply disruption resulting from this will boost the market,” said an analyst from COFCO Futures in SMM interview.

Another analyst from Guosen, however, expects the impact on metals market to be indirect, saying the disruption on production in major producing countries remains to be seen. But, he adds that copper price will likely stage a rally in 2Q.

Foreign investors generally expect a boost on the market from El Niño, especially copper and nickel prices.

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