| China’s Manufacturing PMI Below 50 for 2 Consecutive Months | |
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Key Indicators Freeport Investors Should Track (Part 9 of 17) (Continued from Part 8) China’s manufacturing PMI
Previously, we have analyzed the trends in China’s real estate and automobile industry. Now we will look at its manufacturing PMI, or purchasing managers’ index, which is a key indicator of economic activity. The manufacturing PMI is released on a monthly basis and is based on the diffusion indices of five components:
- New orders: 30%
- Inventory levels: 10%
- Output: 25%
- Supplier delivery times: 15%
- Employment environment: 20%
Analysts track PMI figures closely, as it can give crucial insights into future GDP levels. Readings above 50 generally indicate economic expansion, while a reading below 50 indicates a contraction.
PMI below 50
The above chart shows the trends in China’s official PMI. As you can see, its PMI has been below 50 for two consecutive months, which reflects a slowdown in the Chinese economy. The demand for all industrial commodities would be impacted as a result of this slowdown.
Interestingly, while the official Chinese PMI in February is below 50, the PMI data released by HSBC and Markit show that the PMI was above 50 in February. However, the flash HSBC PMI has fallen to an 11-month low of 49.2 in March. Analysts were expecting the PMI to be more than 50 in March.
Negative for copper
A PMI below 50 indicates weakness in China’s industrial sector, which is negative for the global copper industry and reflects a weakness in Chinese copper demand. A lower copper demand in China will negatively impact copper producers like Freeport-McMoRan (FCX), Teck Resources (TCK), Glencore Plc. (GLNCY), and Stillwater Mining (SWC). FCX currently forms 3.1% of the Materials Select Sector SPDR ETF (XLB).
So far, we have analyzed how copper demand is shaping up in China. In the next part, we will look at the supply side dynamics of the Chinese copper industry.
Continue to Part 10 Browse this series on Market Realist:
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Stillwater Mining Co
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PRODUCER |
CODE : SWC |
ISIN : US86074Q1022 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Stillwater Mining is a copper and nickel producing company based in United states of america. Stillwater Mining produces copper, nickel, palladium, pgm and platinum in USA, and holds various exploration projects in Canada. Its main assets in production are EAST BOULDER MINE, STILLWATER MINE and EAST BOULDER in USA and its main exploration property is SIM LAKE in Canada. Stillwater Mining is listed in Germany and in United States of America. Its market capitalisation is US$ 2.2 billions as of today (€ 2.0 billions). Its stock quote reached its lowest recent point on November 21, 2008 at US$ 1.76, and its highest recent level on May 03, 2017 at US$ 18.00. Stillwater Mining has 121 080 187 shares outstanding. |