LME markets have taken a fall with LME Copper slipping below USD5000 overnight for only the 3rd time in many years. Importantly, this seems to be on the back of a lack any positive news coming out of the world economy at this time.
Also not helping Copper was news on 1 September that the China National Energy Administration released a nationwide industrial standard for the use of low-voltage aluminium alloy cables which Goldman Sachs estimate could reduce copper demand by 100,000 to 250,000 tonnes next year.
The AUD has again dipped below 0.70 and is currently trading at 69.87. The lower Australian Dollar is taking a bit of the sting out of price falls in Australian dollar terms, but with LME prices heading south, we’re expecting buyers to be a little thin on the ground this week.
Please find the following for your perusal;
**** DJ Copper Down on China Slowdown Concerns **** By Ira Iosebashvili
Copper prices tumbled Monday, pushed lower by expectations of more data showing a slowdown in China, the world’s largest consumer of the metal.
Prices for the industrial metal have recently been hit by a barrage of data showing weak demand from China, which accounts for some 40% of global copper demand. Investors expect the country’s Manufacturing Purchasing Managers Index, scheduled for release on Oct. 1, to show a continued slowdown in factory activity. An independent reading of factory activity for August released last week, the Caixin flash manufacturing Purchasing Managers Index, came in at its lowest level in 6 1/2 years.
“The tone of the market is very negative right now,” said George Gero, a senior vice president with RBC Capital Market Global Futures. “People are not eager to buy, even though prices are so low.”
Slowing industrial demand tends to weigh on commodities broadly, but copper is especially sensitive because of its widespread use in everything from bathroom pipes to air conditioners to iPhones.
China’s targeted 7% growth rate for this year would be the slowest pace for the world’s No. 2 economy in 25 years and stems from soft domestic demand, weak global appetite for its exports and a sluggish property market.