Then, there are chemicals that are seeing prices fall and a fall in soda ash prices had hurt Tata Chemicals’ share price. China was expected to contribute to a significant portion of incremental oil consumption post-reopening in 2023. While it’s a bit difficult to pinpoint what is hurting the price of crude oil all of a sudden, the overhang of a slowing world economy is a reasonable one to point to. Copper, zinc and aluminium are all down from their January levels. Even in non-ferrous metals, the weakness is visible. Weak domestic demand for steel will mean its exports will increase and along with the fall in iron ore and even coking coal prices, could lead to weak steel prices in most markets. Iron ore’s fall also signals weak steel prices, with Mysteel, a provider of data and research, saying China’s composite steel price is trading at levels last seen in November 2022. This situation spells rather bad tiding for commodities. While many believe peak rates are around the corner, these could be accompanied by slower economic growth, which in turn affects global demand for the goods and commodities that China produces. They may be learning from the plight of the US Fed and the European Central Bank which have hiked rates sharply to battle inflation. The government and monetary authorities have been careful with their stimulus actions, perhaps to avoid lighting inflationary fires that become difficult to douse later. One part of this could be troubles in sectors such as real estate, where troubles of major developers have seen construction activity slow down. A recent Bloomberg column pointed to it being a case of two recoveries, one a struggling manufacturing one and the other a robust domestic one led by consumer spending. One view is that the domestic economy is doing fine which is particularly reflecting on services activity, but the manufacturing sector is not doing as well. However, its services PMI reading was still healthy at 56.4, but lower than the March figure of 57.8.Īnecdotal reports indicate that consumer spending is recovering nicely, with the recent Labour day weekend seeing travel exceeding its pre-pandemic level even. China’s April manufacturing PMI slipped to 49.2 compared to 51.9 in March, which is not only a sharp reversal but also signifies a contraction in activity. But it’s not about iron ore or steel alone.Ĭhina’s economy is growing in a lopsided way, with its manufacturing sector under pressure after receiving an initial boost from the economy reopening. This was not how the market expected iron ore prices to behave after the Chinese economy opened up fully, and after it ended COVID-related lockdowns and restrictions on mobility in early 2023. Iron ore prices have tanked to $104 a tonne from their recent high levels of $130 a tonne in March, and are now at a level last seen in November 2022. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of. The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days.
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