This week the attention has been focused on the Chinese Economy and the guessing game on how severe the reported economic slowdown is really likely to be. It has been speculated that the much reported fall in the Iron Ore price will be short lived as Chinese stockpiles continue to fall, but on the other hand Chinese steel production is also falling so this will also reduce demand.
On the domestic front the AUD/USD has had a welcomed fall which has assisted in pushing up our copper price.
In the UK the LME was closed as the market enjoyed a bank holiday and no doubt reflected on Prince Harry in Vegas and why he allowed a mobile camera to present at his inaugural naked snooker tournament.
**** Chinese Manufacturing Is Crashing **** Forbes 28 August 28, 2012 by Gordon G. Chang
The HSBC Flash Purchasing Managers’ Index for August crashed, falling to 47.8, well under the final July reading of 49.3. The dismal result, the first indication of China’s economy for this month, was far below 50, which divides expansion from contraction. The final PMI will be released September 3, but it is now clear that August will be the 10th-straight month of decline for the vitally important manufacturing sector in China.
It’s hard to see how manufacturing will recover soon. Manufactured goods are stockpiled at record highs across China. ”My supplier’s inventory is huge because he cannot cut production-he doesn’t want to miss out on sales when the demand comes back,” said Wu Weiqing to the New York Times.
Perhaps that explanation makes sense, but it’s far more likely that Wu’s supplier, which makes sinks and faucets, had been told by the local government to keep production lines going no matter what. And why would city and municipal officials do that? For one thing, local officials don’t want to deal with unrest that idle workers cause. Moreover, lower-level cadres are judged by growth in their districts.
**** METALS-Copper ends down as investors await central bank action ****
27 August Reuters – By Chris Kelly and Carrie Ho
NEW YORK/SHANGHAI, Aug 27 (Reuters) – New York copper futures ended lower in holiday-thin business on Monday, pausing from last week’s near 2-percent climb as investors sought more clarity about central bankers’ efforts to help stimulate global growth and metals demand.
Copper’s pause reflected a more cautious stance this week from the broader market, with the focus squarely set on a meeting of central bankers at Jackson Hole, Wyoming, on Friday for clarity on what the Federal Reserve will do to further stimulate the economy. Investors are also trying to assess how the European Central Bank (ECB) will tackle the bloc’s credit crisis and what China intends to do to keep its rate of growth above the government’s 7.5 percent goal.