On Thursday, copper prices were down by 0.78% to $3.51. The decline was a reaction to the lower-than-expected data on Chinese manufacturing PMI. Despite the downward trend, the red metal prices are finding support from news that China has approved its first COVID-19 vaccine for use by the public.
China records a decline in manufacturing activity
Copper prices are reacting to today’s data on China’s manufacturing PMI. According to the country’s National Bureau of Statistics, December’s figures are 51.9. the readings missed analysts’ estimates of 52.0. This month’s manufacturing PMI is the first bearish reading after the country recorded bullish figures over the past three consecutive months. Since September, the data has exceeded experts’ expectations by coming at 51.5, 51.4, and 52.1 in that order.
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Similarly, the composite PMI has come out lower than in the previous month. December’s reading is 55.1, compared to November’s 55.7.
The downward revision of China’s 2019 growth rate has not made it any easier for copper prices. On Wednesday, the National Bureau of Statistics adjusted 2019’s national growth rate. Notably, the manufacturing sector was subject to the highest cuts.
According to the agency, last year’s GDP rose by 6.0% to $15.1 trillion (98.65 trillion yuan). The revised number is in comparison to the 6.1% growth in the former report. Notably, the manufacturing sector has had the largest reduction. The industry has seen a 2% decline ($77.15 billion) in its initial contribution to 2019’s economic growth.
While commenting about the GDP revisions, The Economist Intelligence Unit’s Yue Su stated, “This suggests the impact of the US-China trade war on China’s manufacturing activity has been underestimated.”
China approves its first coronavirus vaccine
Copper prices are finding support in the news on the approval of the first coronavirus vaccine in China. On Thursday, the National Medical Products Administration announced the approval of a vaccine by Sinopharm for use by the general public. While there is no public data on the efficacy of the drug, a unit of the pharmaceutical company has indicated that the vaccine is 79.34% effective.
The COVID-19 vaccine updates have heightened the optimism of investors looking to trade precious metals. China has become the second country to avail the vaccine to the public after the United Arab Emirates. Subsequently, there are higher hopes that the world will subdue the virus and that economies will recover in the coming year.
The red metal is crucial in the construction, machinery, and electrical sectors. As such, the recovery of global economies will increase the demand for copper and its products.