Fugly PMI tanks steel, ore futures

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From the SMH:

It’s not only the region’s sharemarkets and the Australian dollar that are down on the weak Chinese manufacturing numbers, China’s steel futures fell the most in about a month and Dalian-traded iron ore also dropped.

The most briskly traded rebar for May delivery on the Shanghai Futures Exchange was down 1.1 per cent at 3399 yuan a tonne by midday, just within striking distance from a record low of 3380 yuan reached on January 10. At the Dalian Commodity Exchange, the most-active May iron ore contract fell 0.8 per cent to 856 yuan a tonne.

Weaker steel prices may sour appetite again among traders and Chinese steel producers for spot iron ore cargoes, and likely to drag prices back to seven-month lows reached last week.

“This is really quite worrying,” said Helen Lau, senior mining analyst at UOB-Kay Hian Securities in Hong Kong. “This means any seasonal recovery in steel demand when construction picks up from March will not be as strong as before because overall economic activity is slowing down.”

Markets clearly heeding the Pascometer counter-contrarian sell siren.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.