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Copper Slides After Disappointing Chinese Economic Data

October 16, 2018 at 17:34 by Andrew Moran

Copper futures are sliding on Tuesday after the Chinese government published disappointing economic data that sent domestic shares tumbling. The industrial metal’s declines were further heightened on brewing geopolitical tensions and global trade disputes. Will copper extend its losses?

December copper futures dipped $0.01, or 0.35%, to $2.77 per pound at 16:53 GMT on Tuesday on the Comex division of the New York Mercantile Exchange. The red metal is down 17% year-to-date, but it has rallied 1.5% since the middle of September.

It was bad news for the Chinese economy this week.

According to the National Bureau of Statistics, China’s consumer inflation rate jumped for the fourth consecutive month in September, climbing 2.5% year-over-year to a seven-month high. The inflation gains were driven primarily by higher food and fuel prices.

China’s real estate market, which used to be red hot, recorded a 49% year-over-year decline in home sales in the nation’s 10 biggest cities.

Also, automobile sales decreased in September for the third straight month. This means China is on track to report its first annual decline in auto sales in nearly 30 years.

The sluggish Chinese economy could spell doom for the copper market since it is the world’s largest consumer of the industrial metal. With trade relations between Beijing and Washington not going anywhere, investors fear that it could further exacerbate the nation’s problems. However, if the trade spat lingers and the economy suffers as a result, then it could prompt China to initiate an infrastructure stimulus plan, which would dramatically lift the price of copper.

Copper’s losses were capped by a weaker US dollar as the greenback slid 0.05% to 94.99. A lower buck is good for commodities pegged in dollars because it makes it cheaper for foreign investors to purchase.

Meanwhile, the Polish government announced that it will change tax laws that could allow a 5% levy reduction on copper and other minerals.

In other metals markets, December gold futures edged up $2.00, or 0.16%, to $1,232.20 per ounce. December silver futures were flat at $14.72 an ounce. December platinum futures rose $0.70, or 0.08%, to $847.00 per ounce. December palladium futures shed $4.60, or 0.43%, to $1,073.60 per ounce.

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