BLBG:Silver, Oil Lead Commodity Decline as China Manufacturing Slows
Silver slumped, copper extended a third day of losses and crude oil dropped after data showed manufacturing growth was slowing in China, the world’s biggest user of metals and energy.
The Standard & Poor’s GSCI Index of 24 raw materials fell 0.5 percent to 605.96 as of 2:21 p.m. Singapore time, snapping three days of gains. Cash silver tumbled as much as 2.8 percent, copper for delivery in three months fell 1.7 percent and West Texas Intermediate crude lost as much as 0.9 percent.
Commodities measured by the S&P GSCI lost 7.5 percent in April, set for the worst month since May, on concern Chinese demand is slowing. The preliminary reading of 50.5 this month for a Purchasing Managers’ Index released by HSBC Holdings Plc and Markit Economics compared with a final 51.6 for March. The number was below the median 51.5 estimate in a Bloomberg survey of 11 analysts. A reading above 50 indicates expansion.
“This is adding to the downside risks in commodities,” Justin Smirk, a senior analyst at Westpac Banking Corp. (WBC), said by phone from Sydney. “When you’ve got Europe performing so badly, the U.S. not looking that great and China coming in below expectations, it’s all adding negatively.”
Gold, silver and copper fell into a bear market this month as China’s economy showed signs of losing momentum and growth slowed to 7.7 percent in the first quarter from 7.9 percent in the previous three months. The country represented 41 percent of global copper consumption in 2012, according to Barclays Plc.
Silver, Copper
Silver pared losses, trading 2.4 percent lower at $22.891 an ounce, taking this year’s decline to 24 percent, the worst on the GSCI gauge. Copper traded 1.5 percent lower at $6,830 a metric ton in London and WTI for June was at $88.43 a barrel.
Morgan Stanley and JPMorgan Chase & Co. are among banks that say declines in raw-material prices may be temporary.
“My view is that commodity supercycle has a decade left in it,” said Michael Camacho, chief executive officer of commodities for Europe, Middle East and North Africa for the New York-based bank, on April 16. The “mid-cycle pause” may last for 12 more months, he said.
The “soft patch” in the global economy will pass as growth prospects improve in the second half spurred by monetary easing in developed economies outside Europe and resilient demand in emerging markets, Morgan Stanley said today.
To contact the reporter on this story: Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
