
A gloomy global industrial picture may be catching up to the ability of the United States economy to retain strong gross domestic product (GDP) growth. Our GDP growth tracker currently points to 0.7 percent annualized growth in the U.S. for the first quarter of 2019.
The Eurozone industrial sector appears to be returning to life, with the region’s industrial production growing month on month by 1.4 percent in January 2019, according to Oxford Economics. However, new passenger car registrations in the EU fell 0.9 percent in February, with demand falling in major markets like Italy and Spain.
The big “if” remains China’s economy. One measurement, the Hong Kong Air Transport Movements figure, fell by 14.6 percent in February (year on year) after falling by 4.0 percent in January.
Despite all this, as of
Copper has retained its value thus far in 2019, but TD Securities predicts “the evolving view surrounding the extent of the global slowdown will be paramount in determining the next major direction in the red metal.”
Shanghai Futures Exchange (SHFE) inventories have climbed from 98,000 metric tons in early January to 236,000 metric tons in mid-March. London Metal Exchange (LME) on-warrant inventories have surged by 45,000 metric tons in recent weeks.
Adds TD Securities, “It appears there is no major Chinese stimulus on the horizon, while any trade deal has been delayed, and, in the meantime, global data continues to disappoint, which suggests the current rally could run out of steam.”
Aluminum prices have experienced modest growth in 2019 and in mid-March struggled in the $1,920 per metric ton area, with producer selling in exchange markets evident there previously.
Capital Economics remains cautious about China, the world’s largest metals market. “Developers have turned more cautious, and a slowdown in property construction is likely to weigh on growth in the coming months,” writes the firm. It adds, “The drop in infrastructure investment suggests that fiscal loosening is still struggling to gain momentum” in China.
Commodities Pricing Trends | |||
March 15 | Jan. 4 | % change | |
LME Copper | $6,432 | $5,936 | +8.35% |
SHFE Copper | $7,394 | $6,879 | +7.49% |
LME Aluminum | $1,896 | $1,868 | +1.50% |
LME Nickel | $12,935 | $11,125 | +16.27% |
LME Ferrous Scrap | $326.50 | $280.00 | +16.61% |
SGX Iron Ore | $87.50 | $72.27 | +21.07% |
SHFE Rebar | $571 | $505 | +13.07% |
(Prices per metric ton.) | |||
The author is managing director of Milan-based
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