Shanghai Futures Exchange copper also hit six-year lows and was last down 2.7 percent at 38,050 yuan ($6,129) a tonne on Friday with a survey showing a contraction in activity in China's factories fuelling worries over demand in the top metals consumer as stockpiles steadily mount. China's factory sector contracted by the most in 15 months in July as shrinking orders depressed output to its lowest level since March 2014, the preliminary Caixin/Markit survey showed.
"Today, it's big, bad news with this number well below consensus. It shows there's no signs of recovery in small and mid-sized business in China, but I think it's also related to the summer weak season for demand," said analyst Helen Lau of Argonaut Securities in Hong Kong. Given June indicators had pointed to recovery, and it was the first time Caixin has published the report, another reading was required to determine if this was a trend or a weak patch before a recovery in demand after the summer, she said.
The flash Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) dropped to 48.2, the lowest reading since April last year and the fifth straight month below 50, the level that separates contraction from expansion. Fuelling bearish sentiment, Goldman Sachs slashed its copper price outlook, citing lower Chinese demand growth forecasts.
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