Industrial metals prices trading on the London Metal Exchange were shaken this week by an unexpected slowdown in Chinese growth, followed by gloomy indicators in the United States, which cast doubt on global growth strength.
China, by far the largest global industrial metals consumer, announced Monday, against all odds, a slowdown in growth to 7.7% in Q1, reviving investors concerns about the strength of the economic recovery.
Immediately, prices dropped and the market turned to panic. In addition, a round of disappointing economic indicators in the United States (manufacturing activity slowdown in the New York area in April) accentuated the trend: on Monday alone, the price of copper lost about 5%.
“The indicators published on Monday show that the metals market can not continue to only look at China to find a reason to grow: China has its own economic cycles with its ups and downs which impact its demand for metals,” warned Mr. Meir.
Copper has widened its losses over the week, stumbling Wednesday after a sharp rise in the dollar against the euro and in the wake of disappointing new indicators in the United States (including an unexpected downturn in the manufacturing activity in the Philadelphia area and a decline in March of the composite index of U.S. indicators).
But while U.S. stocks rose sharply since the beginning of March, the metals market should continue to benefit from the recent investor appetite for risky (and more profitable) assets.