Copper prices comfortably above $10,000 and iron ore prices at seven-month highs continue to defy predictions as Chinese PMIs drop into contraction territory.
A reading of official Chinese purchasing managers’ indexes (PMIs) for March shows a sharp fall in economic activity. Construction and manufacturing activity in China, responsible for more than half the world’s consumption of industrial metals, has an outsize impact on prices.
The composite PMI released by the Chinese government fell to 48.8 from 51.2, its second lowest level on record and well below consensus estimates. A PMI reading over 50 indicates growth or expansion while a reading under 50 suggests contraction.
The March survey is an indication that the Chinese economy is contracting at its fastest pace since the initial covid outbreak in Wuhan in February 2020 according to Capital Economics, a London-based researcher.
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