Copper prices were lifted for a second day on Tuesday. The China’s disappointing manufacturing data and bets on potential government stimulus help boost the commodity.
Copper futures for May 14 delivery traded 0.93% higher at the time of writing, bouncing back from the previous losses seen in the previous session after China reported its disappointing Purchasing Managers’ Index (PMI).
China Purchasing Mangers’ Index for March from HSBC Holdings Plc and Markit Economics came in 48.1 lower, compared to analysts’ estimates of 48.7 and a final reading of 48.5 seen in the previous month. The figures shows an economic slowdown in China; the world’s second largest oil consumer. A figure below 50 indicates a contraction and above indicates expansion. The slowdown in the nation’s economy is mainly due to the weak domestic demand, as analysts predict Beijing to launch policy measures to ensure steady economy growth. The manufacturing output index dropped to an 18-month low of 47.3 in March, compared to 48.8 seen in the previous month.
“The slowdown in China’s manufacturing sector points to continued weakness in the prices of industrial metal,” Capital Economics wrote in a research note on Tuesday.
Adding, “Admittedly, copper has already fallen to within a whisker of our end-2014 forecast of $6,350 per ton and with strong growth in supply, a squeeze on the use of metals as collateral, and no immediate catalysts for a rebound in final demand, copper prices may well fall further.”
China’s Prime Minister, Li Keqiang tipped-off possible efforts to stabilize the economy growth to maintain employments at appropriate levels, which is currently over the official growth target of 7.5%.
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