For instance, Chinese data revealed construction activity rose 7% over the January through April period year-over-year, compared to median estimates of 7.4%. China makes up almost half of the world’s copper consumption.
Japan’s economy, the third largest in the world, contracted in the first three months of the year due to weak private consumption and business investment. Europe’s economic growth slowed to 1.7% in the first quarter, compared to a 2.3% expansion in the U.S.
Furthermore, rising Treasury yields and a stronger U.S. dollar are also weighing on commodity plays in general. Higher yields tend to make commodities less attractive since the hard assets don’t provide a yield while a stronger dollar makes them more expensive to foreign buyers that have to pay for US-denominated commodities.
“You can’t ignore the dents in the bullish argument for copper and the global economy,” Tyler Richey, co-editor of investment research publication the Sevens Report, told the WSJ. “There’s a lot of concerns out there.”
For more information on the copper market, visit our copper category.