Commodities Corner: Silver, copper futures drop after ‘benign’ China inflation data

by | May 11, 2023 | Stock Market

Silver futures suffered their largest one-day percentage loss in over three months, and copper futures settled at their lowest since November, as economic data from China dulled demand prospects for the industrial metals. Some commodities, such as copper and silver, fell sharply Thursday because of a rebound in U.S. dollar and concerns over China, said Fawad Razaqzada, market analyst at StoneX.

Indeed, industrial metals took a hit. The most-active July silver futures contract

fell $1.23, or 4.8%, to settle at $24.42 an ounce. The day’s percentage drop was the largest daily decline for most-active silver futures since Feb. 3, according to Dow Jones Market Data.

July copper

fell 13 cents, or 3.4%, to settle at $3.71 a pound, the lowest most-active finish since Nov. 29. “The weakness in Chinese inflation data has intensified concerns about demand from the world’s second largest economy, where the recovery appears to be fading alarmingly,” Razaqzada said in market commentary, referring to China’s CPI and PPI data overnight as “benign.” China’s consumer inflation eased to its lowest level in more than two years, as food and nonfood prices moderated, official data showed Thursday. The consumer-price index rose 0.1% in April from a year earlier, slowing from a 0.7% rise in March, the National Bureau of Statistics said. Separately, new yuan loans issued by Chinese banks in April came in lower than market expectations, which could provide less support to the world’s second-largest economy.

“The steep drop-off in China’s new bank loans in April is a “clear indication of a recovery that is stalling.” ”

— Edward Meir, Commodity Research Group

China’s new bank loans in April fell to about $104 billion, “less than a fifth of March’s tally and half of what was expected,” said Edward Meir, founder of Commodity Research Group, in written commentary for Marex. “The steep drop-off in loans is a clear indication of a recovery that is stalling,” he said.

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