The Chinese Lunar New Year has gotten off to quite a slow start, as far as industrial metal markets are concerned.
The last 18 months have been anything but happy for China’s economy, with their economy expanding at its worst pace in 24 years last year, coming in at 7.4% – a positive yet underwhelming figure. Recent economic indicators seem to point to better times: the flash HSBC/Markit Purchasing Managers’ Index inched up to 50.1 in February, just above the 50-point level that signifies growth.
“China’s shadow banking sector was blamed for falling copper prices last year,” my colleague Jeff Yoders noted recently. “China’s rare earths export quota policy was blamed by the World Trade Organization for protectionist pricing, scarcity of rare earths and increasing prices for years until China finally gave in and lifted the quotas at the end of last year.” Chinese imports of solar panels also continue to be under scrutiny.
All that is to say, China is one factor of many in the lower across-the-board MMI readings for March. The majority of our monthly MMIs, including the Aluminum MMI® and Stainless MMI®, have continued coming off, with only the Copper MMI® experiencing a “dead cat bounce” (and, one could argue, the Rare Earths MMI® having done the same).
Most tellingly, our Raw Steels MMI® saw a huge drop comparatively; ferrous markets are taking a huge hit in the current strong-dollar, high-import environment.
More on each individual MMI throughout this report – download it FREE below: