Column: China’s commodity import trend driven by prices, not economy
China's imports of major commodities are often viewed through the prism of the performance of, and outlook for, the world's second-biggest economy.
Copper futures have hit a six week low on trepidation over China’s worsening economic outlook and caution just prior to a key meeting of the US Federal Reserve.
Three-month copper futures on the London Metal Exchange and Shanghai Futures Exchange both tapped their lowest points since September 7, with January contracts in Shanghai sinking 1.1% to 57,280 yuan and their London counterparts briefly hitting a trough of USD$7,914.
Weakness on the copper market reflects unease over China’s slowing economy, with official data released during the weekend indicating that growth fell in the third quarter for the seventh consecutive period, while reports of enervated exports from the US to China serve to vindicate bearish concern about the Middle Kingdom.
Investors are also especially wary just prior to a two-day meeting of the US Federal Reserve’s Federal Open Market Committee on Tuesday and Wednesday, as any major announcements could impact base metal prices.
Analysts believe investors will remain in a state of heightened caution unless Chinese policy-makers provide signals of further stimulus policies or economic reforms prior to the country’s once-a-decade leadership transition in early November.
