January 5, 2016

Copper tanked 56 points to trade 2.0790 after Chinese private data showed a continued decline in manufacturing. The Chinese economy and the economic data published in China are shrouded in fog. They are manipulated by the authorities and lack the transparency of Western capital markets. That has to be taken into account when there are sharp falls on the Chinese stock market as happened today. The latest figures weighing on the Chinese markets could really indicate a sharp fall in growth that will cause a deep global economic crisis, but on the other hand it could just be another weak figure indicating a pothole in the road but not an impending crisis in China.

Traders attributed the fall in copper prices at futures trade to a weak trend in base metals overseas after two key gauges of manufacturing in China showed factory activity in the world's biggest metals consumer contracted again, underscoring weak demand.

The rout in commodities prices that has wiped billions from the value of energy and mining companies across the world in the past 12 months will continue in 2016, according to economists, analysts and executives on the front line.

Prices in a range of key industrial commodities plunged in 2015 as China’s factories and appetite for raw materials slowed while supply, especially of oil and iron ore, increased.
Bob Dudley, the boss of BP, said the price of oil, which lost 34% in 2015, could continue to fall in the first few months of 2016. “A low point could be in the first quarter,” Dudley has told BBC radio.

Dudley predicted that prices could stabilize towards the end of the year, but would remain low for the foreseeable future.