Yesterday in China the Government released the latest annualised GDP figure which showed the economy growing at 6.90%, which was better than most forecasts. The result was greeted with a dose of disbelief by various economists, given it flies against all other indicators, although it’s also fair to say a few stopped short of accusing the Government of anything sinister. Perhaps it was just a typo.
On the same day it was announced that China’s biggest glass maker, Farun, had gone broke and 8000 workers would be out of a job. The news of Farun was actually greeted a positive by economists as it was an indication that the Chinese Government would now stop propping up loss making companies and it would allow excess capacity to leave the economy. Let’s hope it extends to Chinese steel making.
The AUD/ USD is currently trading at 72.45
Please find the following for your perusal;
*** DJ Copper at One-Week Low on China Demand Worries *** By Tatyana Shumsky and Georgi Kantchev
Copper prices sank to their lowest level in more than week on Monday after China’s economy expanded at its slowest rate in six years.
Copper prices have been under pressure for much of 2015 on concerns that a slower pace of economic activity in China, the world’s top copper buyer, would translate into lower demand for the metal.
Copper is widely used in manufacturing and construction, two sectors of China’s economy that have struggled in recent months. Traders worry that any reduction in Chinese copper purchases will lead to a supply glut that would sink global prices of the metal.
Prices pulled lower on Monday after a report showed China’s gross domestic product expanded 6.9% in the third quarter. The report fanned speculation that Beijing will struggle to meet its year-end growth target of about 7%.
“The GDP number is very disappointing and we still have a lot of copper on hand,” said Blake Robben, a senior market strategist with Archer Financial Services in Chicago.
More worry for copper traders came from separate reports showing Chinese industrial production rose less than expected in September, while the country’s fixed-asset investment slowed.
“Most of the support is coming from China’s retail sector, and most of the pressure is coming from manufacturing, which is where copper is mostly used,” said Dave Meger, director of metals trading with High Ridge Futures in Chicago. “It doesn’t appear that we’ve hit the bottom in China’s decline, and under that premise the market is still concerned about demand for copper going forward,” he said.
Many analysts say that copper prices could now fall back below $2.25 a pound. Barclays forecasts that copper prices will average $4,850 a metric ton, in the fourth quarter owing to the bearish market sentiment and weaker demand from China.
“China’s economic activity dominates the short-term price outlook and sentiment. Data in 2015 are overwhelmingly bearish for copper’s price outlook,” analysts at Morgan Stanley said in a report