-- Brent crude oil is down 1.8% to $75.71 a barrel.
-- European benchmark gas is up 1.5% at EUR25.36 a
-- Gold futures are 0.6% higher at $1,955.20 a troy ounce.
-- LME three-month copper futures are down 0.2% at $8,124.50 a
-- Wheat futures are down 1.6% at $6.06 a bushel.
China's Fading Recovery Reveals Deeper Economic Struggles
China's era of rapid growth is over. Its recovery from
zero-Covid is stalling. And now the country is facing deep,
structural problems in its economy.
The outlook was better just a few months ago, after Beijing
lifted its draconian zero-Covid controls, setting off a flurry of
spending as people ate out and splurged on travel.
But as the sugar high of the reopening wears off, underlying
problems in China's economy that have been building for years are
The property boom and government overinvestment that fueled
growth for more than a decade have ended. Enormous debts are
crippling households and local governments. Some families, worried
about the future, are hoarding cash.
Central Banks Look to Increase Gold Reserves as Geopolitical
Nearly a quarter of central banks are looking to increase gold
reserves this year, spurred on by geopolitical worries, interest
rate concerns and rising inflation pressures.
Up to 24% of central banks were looking to raise gold holdings
in 2023, according to a new survey from the World Gold Council.
In particular, emerging market central banks were more keen to
increase reserves of the precious metal, the industry body said,
while 71% of the survey's respondents expected overall central bank
gold holdings to rise this year, compared with 61% last year.
Gold, which has long been used as a store of value and hedge
against economic strife, is still seen as attractive by central
banks, according to Shaokai Fan, head of central banks at the WGC.
"There's been a major shift in how central banks perceive the
dollar and the role of gold," said Fan. "Central banks move at a
slow pace and last year's events were a shock to everybody," he
said, adding that current moves support last year's gold buying
Copper Prices' Upside Risks Growing on Rising Property, Grid
0905 GMT - Copper prices have fallen sharply through May amid
wavering demand from China, however a price bounce could be on the
horizon, according to Morgan Stanley. Copper prices have slipped
11% in the last four weeks and 15% from its year-to-date high,
analysts at the U.S. bank say in a note. However, there are some
"green shoots," they say. Chinese property completions are up 18%
YTD and 5% higher than 2019 levels, while grid spend is up 10% YTD
and electric-vehicle sales are up 44%. "On top, although refined
copper imports are down 11% YTD, copper ore and concentrate imports
are up 6%, refined production is up 14%, and semis output is up
12%. If we add production to net imports, we imply China's
'apparent consumption' ex inventories to be up 9%," MS says.
Oil Slips on Doubts Over US Debt Deal
0740 GMT - Oil prices dipped on concerns that President Biden's
debt-ceiling deal could struggle to win congressional support.
Brent crude oil falls 1% to $76.37 a barrel while WTI declines 0.7%
to $72.13 a barrel. While the deal, signed over the weekend, should
have allowed investors to breathe a sigh of relief, some
Republicans have said they will oppose it. Congress has until
Monday to approve the deal or the U.S. could default on its debt.
The focus is also on an OPEC meeting on Sunday. OPEC "will want
more evidence of the impact of its lower output quotas before
making further changes" despite recent hints from Saudi Arabia
indicating they are considering another output cut, ANZ says in a
Metals Slip Amid Mixed Macro Signals
0716 GMT - Metal prices are falling with the macroeconomic
environment sending mixed signals at the start of the week.
Three-month copper is down 0.7% to $8,081.50 a metric ton while
aluminum is 1.2% lower at $2,215.50 a ton. Gold meanwhile is down
0.5% to $1,935.60 a troy ounce. "U.S. bond markets are pricing
another 25 basis point hike by the end of July, a hawkish shift
that's good for the U.S. dollar but bad for risk assets and
commodity prices," says Peak Trading Research in a note. Peak says
that markets will be watching how debt ceiling talks progress as
well as U.S. job numbers this week, and their effect on the U.S.
China's Slow Drawdown of Steel Stocks Indicates Weak Demand
0716 GMT - China's average steel inventory drawdown 12 weeks
after the 2023 CNY was in line around 25%, although the rate of
drawdown has slowed over the past month, Citigroup analyst Ephrem
Ravi says, adding that inventories usually go sideways from June to
early October before drawing down again. While the drawdown of
stocks ticked up marginally three weeks ago, which is unusual for
any week in May, the rate of drawdown has been slower since then,
indicating weak demand pickup, the analyst says. Looking forward,
an average 30% draw over 16 weeks post CNY peak (13%-48%) would
mean the drawdown is on track. (email@example.com)
India's Steel Sector Booming on Infrastructure Spending
0046 GMT - India is expected to experience the biggest rise in
steel demand of any major producing nation this year, Commonwealth
Bank of Australia analyst Vivek Dhar says in a note. "With a 33%
[year-on-year] boost in government capital spending in 2023--24
(year ending 31 March 2024) to fast track infrastructure
development, we think India's steel output growth will lead the
world again in 2023," says Dhar. India was already the only major
steel producer to notch a year-over-year increase in output in
2022, he says. The World Steel Association forecasts Indian steel
demand will rise by 7.3% this year after increasing by 8.2% in
2022. (firstname.lastname@example.org; @RhiannonHoyle)
Write to Barcelona Editors at email@example.com
(END) Dow Jones Newswires
May 30, 2023 06:57 ET (10:57 GMT)
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