NEW YORK (Commodity Online): Copper prices may weaken further as indications from the Chinese have been disappointing in recent weeks. With declining manufacturing activity, cooling property market and slowing exports, the worse may be yet to come.
The Chinese slowdown
-Chinese manufacturing PMI has been below 50 for "a more than comfortable" number of months indicating that the factory sector in China is slowing down. Exports from Europe have been falling and so it should not come as a surprise that manufacturing too is slowing down.
-The Chinese banks are facing a real risk of unrecoverable debts which might trigger a financial collapse more faster than one might think. And investors too have started taking note. A recent Bloomberg poll indicated that a whopping 61% of respondents are anticipating a crash in the Chinese financial industry by 2016.
-The World bank has also warned that the slowing Europe will pose a threat to its exports and hurt the economy. “we believe that while there are issues (in China), they are being managed and the magnitude of those issues does not add up to something that would lead necessarily to a major slowdown as some have talked about” the bank stated.
COMEX copper prices have been on a downtrend since March. With a recovery in October still underway, one should watch out for the short term uptrend line. A break below could expose prices to further lows.
