It has been a tough month for metal markets and particularly for copper which has seen a fall of A$723.00 during March. Contrary to previous trends the AUD / USD exchange has also risen from 0.89c to 0.925 throughout the month which has put further pressure on copper and all other exported metals in Australian dollar terms. Normally the falling LME pushes the AUD/USD lower such as August 2008 when the AUD dropped from 93.32 to 66.3 in 3 months as Copper fell from USD8096 to USD3995
As the following article suggests, manufacturing in China is less than may have been projected with talks of Government stimulus being required to give the economy a boost. This is particularly relevant for the Australian economy with many of our exports including iron ore being reliant upon Chinese markets. It’s fair to say that a stimulus package is only required in a slowing economy, which the world doesn’t want to be hearing out of such a massive consuming and manufacturing country such as China.
**** DJ Copper Prices Down as Market Awaits China Manufacturing Data ****
By Ira Iosebashvili
Copper prices were lower Monday as traders awaited manufacturing data from China, the world’s biggest consumer of the metal.
China, the final destination for some 40% of the world’s copper, is slated to report its Purchasing Managers Index on Tuesday, giving the market a snapshot of the manufacturing sector in the world’s second-largest economy.
Prices for the industrial metal rallied to a two-week high Friday, after a top Chinese official hinted the country may launch stimulus measures to boost economic growth.
“In order for copper to stay above $3.00 per pound, we need at least a slightly better than expected number on tomorrow’s data,” said James Cordier, a principal at Liberty Trading Group. “That’s how important China is to the copper trade at the moment.”
Copper prices are down more than 10% this year amid worries that China’s slowdown will further curb growth of the country’s demand. A stronger economy would translate to greater demand for copper, which is used in a broad swath of industrial applications.