LONDON (Commodity Online): The metals have remained under pressure this morning following a sharp deterioration in the macroeconomic backdrop and market sentiment. As growth assets, the base metals are vulnerable to any slowing in economic activity and will therefore remain sensitive to the ebb and flow of economic data.

Zinc and Tin are the metals facing the largest losses and we expect zinc to continue underperforming the complex given its comparatively weaker fundamentals. The drop in Aluminium (to $2,410/t) and Copper (to $8,980/t) prices has sparked consumer buying interest and for copper in particular, in Asia.

These metals both benefit from solid underlying demand strength and in the case of copper very low consumer inventories and a weak supply side picture. Fundamental data the North American Aluminum Association data for July showed a sharp slowdown in the pace of growth in semis new orders.

New orders increased 2% y/y, down from growth of 11% the previous month and the weakest y/y growth in the year so far, and by a large margin. This slowdown is in line with weaker manufacturing activity data, though is likely to have been exacerbated by the knock-on effects of Japanese supply chain disruptions to the autos sector.

Nevertheless, this points to a slowing in Aluminium demand growth in H2 compared with the impressive double-digit growth in H1. While this profile is in line with our own demand forecasts, the magnitude of the slowdown in growth in July is larger than anticipated.

Post your comment  (0)

Connect:

Post to Twitter

Post to Facebook