Welcome to 2016. Only 6 working days into 2016 and on the back of more data that the Chinese economy is slowing down, the world’s largest casino (also known as the Chinese Stockmarket) has fallen 14.76 %. Furthermore, with reports that most retail investors were using debt to invest in the stockmarket, it is expected the collateral damage from the stockmarket rout could extend into other parts of the economy, such as the selloff of copper stockpiled in Chinese ports. Going along for the ride has been Copper (down 5.3% in USD) and Lead (down 5.6% in USD).
Thankfully AUD/USD has fallen from over 73c on 4 Jan to its current level at 69.50. We are hopeful that speculation the dollar could fall to 60-64 range proves correct.
The Aluminium market has held up with reports last week that Alcoa will close its 270,000 tonne-per-year Warrick Smelter, leaving America producing the least amount of aluminium since World War 2.
Looking back to 2015, Copper lost a quarter of its value over the year and Nickel lost 42%. Let’s all hope for a better year ahead.
World mining index falls as BHP touches lowest since 2005 By Agnieszka de Sousa
Copper dropped to a six-year low after muted Chinese inflation and more equity losses in Shanghai increased concern that demand will slow in the biggest metals user. BHP Billiton Ltd., the world’s largest miner, reached the lowest in a decade.
Industrial metals retreated as Chinese shares extended the world’s worst selloff this year, with data at the weekend showing the country’s inflation in December stayed at about half of the government’s 2015 target. While the rout in China may be driven more by policy “mishaps” than economic fundamentals, it has global implications, according to the Economist Intelligence Unit.