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Bloomberg - Copper Sends a Message to Markets That Growth Is Already Wrecked

Good afternoon all!

 

Given all the trade talk and economic news in the air over the past week, I thought that I would send a note on how commodities are fairing with this news.

 

As I’m sure that you have noticed on your scrap metal credits of recent, market pricing is declining from several months back.  Naturally, I have sent along some information detailing the price movements, however, this article below paints picture on how metal pricing is now a leading indicator on our economic fortune (or lack there of).  And more soberly, as a metal trader once told me – ‘the trend is your friend’ – and this trend seems to be bearish.

 

Interestingly, not all scrap metal pricing has been bearish over the past quarter, however, base metal prices have been declining for the better part of the year.  More interesting to me, at least, is that the decline has been broad based – not specific to one commodity.

 

The same culprits of mill demand, lack of export market, tariffs and trade wars have been a staple of the causes.  However, it now seems to be that global growth is also playing its part in weakening commodity pricing.  It is hard to appreciate a slowing global economy from the perspective of what is happening in the Waterloo Region.  But outside our bubble, there seems to be more and more pockets of slowing growth and demand and this is trickling down into base metal pricing.  They don’t call copper the “Doctor’ for nothing. 

 

I felt that this article is worth sharing because it is one of the first articles that I have reviewed that is tying in base metal pricing to our wider economy.  It is not fear mongering – but educational and does a really good job in an efficient way of explaining what is going on.  I would read this article for what it is – a good analysis of the theory meeting our reality of business – and what is happening out there is affecting all businesses equally. 

 

I hope that you enjoyed your long weekends (if you got one) – we certainly did.  I think that August has gotten a lot more interesting….

 

Naturally, if you have any questions or concerns about the market and how it may affect your scrap metal stream, please don’t hesitate to give me a call or an e-mail. 

 

Cheers,

 

Amichai Tsarfati, CPA, CA

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