COLUMN-Worried about China? Ask a metals trader – by Andy Home (Reuters U.S. – August 26, 2015)

Aug 26 (Reuters) – Everyone’s worried about China. Collective concern about what exactly is happening in the world’s second-largest economy is roiling all parts of the financial universe.

Industrial metal markets have not been immune and the price of copper, viewed by many investors as a proxy for industrial activity, hit a fresh six-year low of $4,855 per tonne on Monday.

But while the rest of the world seems shocked that all is not as it should be in the industrial powerhouse that is China, metal traders have been grappling all year with the implications of a Chinese slowdown.

The omens were there as early as January, when London copper prices fell almost 12 percent in two days after a bear attack led by Chinese funds. They were expressing what with hindsight looks a good call on the impact on Chinese demand of weakness in key metallic parts of the economy such as construction, automotive and manufacturing.

While other markets now fret about the potential for a “hard landing” in the Chinese economy, industrial metal markets have arguably been living with just such a scenario for many months.

Right now sentiment is king across all markets with fear and panic breeding more fear and panic, but industrial metals, which first felt the chill winds from China, may offer some light in the current gloom and doom.


Few saw the January bear raid on copper coming.

Sure, copper prices had been trending lower for four years from their peak above $10,000 per tonne in early 2011.

But the narrative was all about supply, as the world’s copper miners gradually lifted output after years of collective underperformance and lack of investment in new capacity.

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