Oil prices dropped to a six-month low and iron ore fell towards $US100 a tonne as concerns intensified that China’s recovery has stalled.
A surprise rate cut by China’s central bank after the release of softer-than-expected economic data sent commodity prices tumbling as fears resurfaced about a demand-crippling slowdown in the world’s second-largest economy.for the second time this year on Monday in an attempt to stimulate growth as the country battles persistent COVID-19 outbreaks and a property crisis.
“In our view, the impact of all the stimulus pledged so far is fairly limited. A small interest rate cut is insufficient to boost domestic demand,” said Raymond Yeung, ANZ’s chief economist for greater China. China’s daily crude steel output fell 13 per cent in July compared to a month earlier, which coincided with negative steel mill margins worsening during the month.Commonwealth Bank’s mining analyst, Vivek Dhar, noted China’s steel output would decline from last year’s levels if the daily output remained the same between this month and Christmas.
The prospect of softening demand was met fears about growing supply, as Libya pumps more oil into the market and Iran edges closer to reviving a nuclear deal which would spark higher flows of crude.Base metal markets were also broadly lower. Copper was down 1.4 per cent to $US7980 a tonne, nickel dropped 4.4 per cent to $US2201.30 a tonne, and aluminium tumbled 1.8 per cent to $US2390 a tonne.
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