From Yahoo Finance
The scary factors behind copper's price plunge
Cascading copper prices have multiple root causes that lead to one conclusion: The anticipated global economic recovery may not be all it's cracked up to be.
Consequently, analysts are in virtual unison that the extended-term trajectory is lower for the metal often used as a growth barometer. Copper futures are off more than 12 percent in 2014 and 7 percent over just the past three days, though they rose less than 1 percent in Wednesday trading.
A slowdown in the global economy, forced selling by Chinese banks and technical factors have converged in multiple calls for more weakness in a commodity known by traders and economists as "Dr. Copper" for its ability to accurate make economic prognoses.
"It has been our long-held (and non-consensus) view that copper and iron ore prices were set to fall significantly this year," commodities expert Caroline Bain at Capital Economics said in a note. "The speed of the recent price falls has taken even us by surprise, but we still see further downside."
Bain cited two reasons: "China's weak industrial activity data is one. Second, the appeal of commodity trade-related financing deals in China appears to be waning."
The latter factor is particularly intriguing.
Read more from Yahoo Finance >>
The scary factors behind copper's price plunge
Cascading copper prices have multiple root causes that lead to one conclusion: The anticipated global economic recovery may not be all it's cracked up to be.
Consequently, analysts are in virtual unison that the extended-term trajectory is lower for the metal often used as a growth barometer. Copper futures are off more than 12 percent in 2014 and 7 percent over just the past three days, though they rose less than 1 percent in Wednesday trading.
A slowdown in the global economy, forced selling by Chinese banks and technical factors have converged in multiple calls for more weakness in a commodity known by traders and economists as "Dr. Copper" for its ability to accurate make economic prognoses.
"It has been our long-held (and non-consensus) view that copper and iron ore prices were set to fall significantly this year," commodities expert Caroline Bain at Capital Economics said in a note. "The speed of the recent price falls has taken even us by surprise, but we still see further downside."
Bain cited two reasons: "China's weak industrial activity data is one. Second, the appeal of commodity trade-related financing deals in China appears to be waning."
The latter factor is particularly intriguing.
Read more from Yahoo Finance >>
No comments:
Post a Comment