China Data Signals Slowing Economy – Commodities Update – Oil, Iron Ore, Gold, Nickel, Copper

Copper lead most industrial metals lower after factory and retail-sales data signaled further slowing in China, the world’s biggest user.

Copper in London fell as much as 1 percent, while aluminum, nickel, lead and tin also declined. Industrial-output growth in China was the weakest in August since the global financial crisis, while investment and retail sales moderated, figures released Sept. 13 showed. Factory data due today from the U.S., the second-biggest metals user, will probably indicate activity in August slowed from the previous month, according to a Bloomberg News survey.

“The Chinese data over the weekend came in worse than expected,” Daniel Hynes, an analyst at Australia and New Zealand Banking Group Ltd., said by phone from Sydney. “It’s not surprising the base metals are weaker on the back of it.”

Copper for delivery in three months on the LME fell to as low as $6,770.75 a metric ton, the lowest intraday level since Sept. 11. Prices were down 0.5 percent at $6,804 a ton by 3:16 p.m. Hong Kong time, poised for the lowest close since June 19.

In New York, the December-delivery contract dropped 1 percent to $3.077 a pound, while in Shanghai the metal for delivery in November fell 0.4 percent to close at 48,380 yuan ($7,877) a ton.

Industrial output in China rose 6.9 percent from a year earlier in August, the National Bureau of Statistics said on Sept. 13. That’s down from 9 percent in July and the slowest pace outside the Lunar New Year holiday period of January and February since December 2008, based on previously reported figures compiled by Bloomberg.

On the LME, lead fell 0.6 percent to $2,110 a ton, while aluminum declined 0.4 percent to $2,020.50 a ton.

Vale’s View

Iron ore may rise to as much as $100 a ton by the end of the year because of declining inventory at ports, Vale Chief Executive Officer Murilo Ferreira told reporters on Sept. 12 in Beijing. Some producers are reducing exports given current prices, Ferreira said. China is the world’s largest buyer.

In China, there’s mounting evidence locally-mined supplies are starting to drop, Morgan Stanley’s Crane wrote. Output, when adjusted to show the equivalent of 62 percent content, fell 13 percent between April and July year-on-year, he said.

“Market participants appear split on the floor price,” Australia & New Banking Group Ltd. analysts including Mark Pervan wrote in a report today. While some are “thinking the resilience of Chinese iron ore supply will see prices fall below $80 a ton, while others firmly believe domestic output can’t sustain current price levels for much longer.”

Expanding Glut

Iron ore prices are unlikely to recover as the global surplus expands, Goldman Sachs Group Inc. said in a Sept. 10 report. The bank reduced its price forecast for the final three months of 2014 by 10 percent to $90, and also reduced full-year estimates for 2016 and 2017.

The structural nature of the surplus and a weak demand outlook in China make a recovery in prices unlikely, Goldman analysts Christian Lelong and Amber Cai wrote in the report. The global glut will more than triple to 163 million tons in 2015 from 52 million tons this year, and widen further to 245 million tons in 2016 and 295 million tons in 2017, it said

Oil Supply

Brent fell to $96.27 a barrel after settling at its lowest level since June 2012 amid concern global fuel consumption is slowing while output climbs. West Texas Intermediate crude sank 1 percent to $91.34 today, after slipping 0.6 percent Sept. 12. The International Energy Agency cut its global oil-demand forecast for 2015 last week.

Russia’s ruble slid as much as 0.5 percent to 37.0380 per dollar, a record low, before trading at 37.985. The euro bought 49.2745 rubles, the most since Sept. 1. The Micex Index climbed 0.2 percent in Moscow.

Copper for three-month delivery on the London Metal Exchange fell to $6,802.75 a metric ton, following last week’s 2 percent retreat. Lead dropped 0.6 percent to $2,108 a ton.

Gold for immediate delivery increased 0.4 percent to $1,234.98 an ounce after closing last week at $1,229.65, the lowest since Jan. 9.

Palladium climbed 1.3 percent to $848.50 an ounce.


2014-08-13 Reuters Gold Poll

Reuters quarterly interviews analysts to gather their gold price prediction. We have collected the forecasts made in 2014 and conclude that the sentiment has stabilized but the expectations for 2015 remain low.

THOMSON REUTERS 2014 Avg Gold Price Prediction 2015 Avg Gold Price Prediction No of Analysts interviewed
Q1 Poll Jan 2014 $1,235 37
Q2 Poll Apr 2014 $1,278 $1,250 28
Q3 Poll July 2014 $1,277 $,1250 31

 Nickel Falls a Fifth Session Amid China Slowdown Signals

Sept. 15 (Bloomberg) — Nickel and aluminum fell for a fifth session in London as industrial metals declined after factory and retail-sales data added to evidence of a slowing economy in China, the world’s biggest consumer. Copper slid.

Chinese industrial-output growth in August was the weakest since the global financial crisis, while investment and retail sales moderated, figures showed. Factory data due today from the U.S., the second-biggest metals user, will probably indicate activity in August slowed from the previous month, according to a Bloomberg News survey.

“Weak Chinese data weighed on base-complex prices,” RBC Capital Markets Ltd. said in a note today. Commodities slumped to the lowest level in more than five years.

Copper for delivery in December lost 0.8 percent to $3.081 a pound by 8 a.m. on the Comex in New York.

The metal for delivery in three months fell 0.4 percent to $6,808 a metric ton on the London Metal Exchange and lead touched the lowest price since June. An index of the six main metals traded on the LME slid the most since March last week.

Industrial output in China rose 6.9 percent from a year earlier in August, the National Bureau of Statistics said on Sept. 13. That’s down from 9 percent in July and the slowest pace outside the January-February Lunar New Year holiday period since December 2008, based on previously reported figures compiled by Bloomberg.

“Prices may well weaken further,” William Adams, an analyst at Fastmarkets.com in London, said in a note today. “We saw last week a combination of weakness and bouts of scale-down buying, and we feel we may see more of the same this week, especially in those metals that have seen strong price gains in recent months.”

Copper stockpiles monitored by the LME fell 0.1 percent to 156,375 tons, daily data showed. Orders to take the metal from warehouses rose to 40,250 tons on bookings in New Orleans and are up 40 percent in three sessions, the most since April 2013.

Tin and zinc declined in London.

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