Materials Risk (5)
May 1, 2013 Leave a Comment

Chinese manufacturing slows in April; further weakness likely

More evidence emerged today showing that Chinese manufacturing activity is continuing to slow following a strong start to 2013.

The Chinese governments official purchasing managers index fell from 50.9 in March to 50.6 in April, although as the reading is over 50 still in expansionary territory. Manufacturing accounts for approx 45% of Chinese GDP.

The official PMI tallies with preliminary  HSBC PMI data which showed activity slowing from 51.6 to 50.5.

Related article: Chinese manufacturing output slows in April

Copper (the main exchange traded commodity with a large exposure to Chinese demand) fell by 0.8% this morning. Copper prices fell by 7% in April, the sharpest monthly decline since May 2012.

As we have argued before, there could be further price weakness in copper and other industrial metals later in the second quarter before growth in Chinese manufacturing returns later in the second half of 2013.

Related article: Where next for copper prices?

Filed Under: China, commodities, manufacturers
April 23, 2013 Leave a Comment

Commodity price slump only source of relief for Eurozone manufacturers

The Markit Flash Eurozone Manufacturing PMI fell to a four month low in April of 46.5, down from 46.8 in March. Meanwhile, new business (both manufacturing and services) fell for the twenty-first successive month, with the rate of deterioration accelerating for the third month in a row to signal the steepest decline since December.

Euro-zone manufacturers input prices fell for the third straight month in April and at the sharpest rate since July 2009. The fall in input prices reflects downward commodity price pressures which have declined by 4.6% over the past month, according to the Economist Euro index of commodity prices.

EZ manufacturing input prices April 2013

Filed Under: commodities, manufacturers
April 23, 2013 Leave a Comment

Chinese manufacturing output slows in April

Chinese manufacturing activity growth slowed in April according to the latest HSBC Flash purchasing managers index (PMI). The index fell to 50.5 in April, down from 51.6 in March and compares with market expectations of a reading closer to 51.5. In addition to weaker output growth “…new export orders contracted after a temporary rebound in March, suggesting external demand for China’s exporters remains weak”, according to HSBC. Both input and output costs fell further into negative territory. As China’s industry minister notes the country is ”clearly facing over-capacity problems.”

China manufacturing PMI April 2013 HSBC
Source: ZeroHedge

Base metals are particularly sensitive to any decline in Chinese manufacturing growth. As we have noted previously, manufacturing growth does tend to slow in the second quarter so there is potential for further base metal price weakness over the next few months.

Related article: Where next for copper prices?

Filed Under: China, manufacturers
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