The story here is as much to do about the outlook for copper prices as it is for the Chinese economy, with the latter also having consequences towards the global growth outlook in general.
Chinese copper product makers are saying that they will cut output for Q2 this year, as there is a lack of demand with domestic consumption observing a slow recovery from the pandemic. Adding to that, sluggish exports are also weighing on demand conditions.
For some context, China is the world's largest copper consumer and so, slowing demand conditions is not a good sign for the health of the global economy as well - considering how important China is in that regard.
Reuters is reporting that officials from six metal manufacturers are saying that copper orders are down compared to a year ago. And that has even forced them to cut offer prices and sell at a loss.
One of them said that "never have I seen such poor demand like this year", despite being 14 years in the industry.
Building on that, the Shanghai Metals Market has also indicated that copper rod production lines in China have fallen to around 64% by mid-April from around 75% at the end of March.
I mean if that is the case already in Q2, when it is supposed to be where stocks are built up, then surely things will only get worse during the summer time - which is said to be the weak demand season.
That doesn't bode well for the copper outlook in the short-term, with prices now lingering at one-month lows. As for the Chinese and global economy, this might well deliver an early warning sign of things to come.
