Base Metals Preview: Weak Manufacturing Data To Weigh On Copper

COMEX Copper futures fell to a one month low per pound on sustained global economic worries. However, overall sentiment remained choppy as leading copper consumer China is on a week-long holiday. The metal currently trades at $2.57 per pound, up 0.30% on the day. MCX Copper futures closed at Rs 438.55 per kg, up 0.11% on the day in the last session. Escalating trade tensions and a slowing global economy have led WTO economists to sharply downgrade their forecasts for trade growth in 2019 and 2020. World merchandise trade volumes are now expected to rise by only 1.2% in 2019, substantially slower than the 2.6% growth forecast in April. The projected increase in 2020 is now 2.7%, down from 3.0% previously.

Broad economic data turned in a weak performance. The US manufacturing purchasing managers' index (PMI) from the Institute for Supply Management came in at 47.8% in September, the lowest since June 2009, marking the second consecutive month of contraction. Euro-area manufacturing sector contracted at the fastest pace in nearly seven years. The final manufacturing PMI dropped to 45.7 in September from 47.0 in August. The reading was just above the flash estimate of 45.6. UK manufacturing PMI rose to 48.3 in September from August's six-and-a-half-year low of 47.4 but stayed in contraction zone under 50. Japan's Jibun Bank final manufacturing PMI fell to 48.9 in September from 49.3 in August. The manufacturing sector contracted the most in seven months in September as firms reduced production amid weak demand.


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