| The above graph shows monthly line chart of Bloomberg Base Metals Spot Prices Index on Primary Y-axis and Chinas Final Manufacturing PMI in secondary Y-axis from May-12 to April-15.Chinas HSBC Final manufacturing PMI fell to its lowest levels in last one year at 48.9 levels in April, well below the expectation of 49.4 and down from 49.2 levels in March; below 50.0 levels indicates slow down in industrial growth. China is the biggest consumer of metals. Industrial demand and investment activity growth will likely stay on a relatively subdued path which will further dampen the demand for metals.We can see that in the above graph, there is a very good correlation between Manufacturing PMI data and Bloomberg Base Metals Spot Price Index. But there have been divergence seen since November 2014, when the People\\`s Bank of China has introduced a series of stimulus measures, including lowering twice the interest rates and cutting the reserve requirement ratios of major banks twice, in order to spur economic activity and boost economic growth of the country. Now days, weak manufacturing data indicates that more stimulus measures may be required to ensure growth of economy. If the stimulus works, it could accelerate the demand for metal. |
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