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Chinese Slowdown Hurts Commodity Growth as Speculators Cut Long Bets

April 16, 2012 at 16:54 by Andriy Moraru

Many commodities fell today as the hedge funds and other big speculators continued cutting long positions on the industrial and main agricultural commodities, expecting China to grow slower than was expected back in 2011. Copper and platinum turned out to be the main losers on worsened expectations, while oil even hit its 2-month low today.

Copper is very dependent on the pace of growth of the Chinese economy. The country consumes about 40 percent of the world’s production and even slightest drop in growth would mean a significant drawdown in copper demand. The metal is already down about 5.3 percent this month.

Platinum once again trades below gold’s price despite the fact that it’s a rarer material. Being an industrial metal with a heavy reliance on the automotive sector, it reacts with a great volatility to any signs of poor performance from China, which is the world’s biggest car producer according to the latest available data.

Oil is a connected story. Having failed to advance past the major resistance level at $127/barrel in late March, this energy commodity is going straight down with a new minimum since February 15 touched today. As the forecasts for China’s GDP growth are revised down both domestically and internationally, the speculative demand for oil is vanishing quickly.

Copper opened $3.5885/pound today after closing at $3.6205 yesterday on COMEX. Today it is up to 3.6220 as of 16:49 GMT. Platinum is down from $1,579.50/ounce to $1,573.00 today, while oil (Brent) is currently down $121.41 to $118.59 per one barrel.

If you have any questions and comments on the commodities today, use the form below to reply.

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