SaxoTV
Metals melt, prices plunge as China crisis hits commodities
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The Chinese stock market bubble has burst and so far, despite Chinese state intervention, there looks to be no end in sight. Saxo's Ole Hansen says 80 to 100 million Chinese investors have started to panic and are trying to reduce their exposure. Commodities - in particular cyclical ones such as energy and metals - are being hit hard.
China consumes 40-50% of all industrial metals. Hansen says that copper and nickel are leading the sell-off with copper reaching its lowest level since 2009. Iron ore has also been hit, which is bad news for Australia and Brazil.
Crude oil has fallen around USD 10 in just a matter of days. Ole says the slide began after last week's US inventory report, which put the market on the defensive. The stock market crash in China has exacerbated the situation. He believes WTI will find support around the USD 50 a barrel level and USD 55 for Brent. Eyes are also on the talks with Iran which have yet again been postponed.