When China Goes - Mining Stocks Go
If the recent trends continue, mining stocks may turn out to be one of the worst performing sectors of 2008 when the first 6 months looked oh so promising. A slowdown in China’s economy is having a devastating effect on commodity markets as demand for construction materials and materials used in exports slows down among the world’s reeling financial markets.
As the Sub-Prime Syndrome has taken its toll on the financial markets, the financial crisis is threatening to sink the global economy into recession.
China has a glut of commodities supplies at the moment and even 5-7% GDP expansion could have a negative impact on commodity prices , especially oil ,coal, copper and iron ore. Growing fears that China will scrap plans for new power plants will place a strain on copper prices.
When China’s customs office releases preliminary data showing September metals trade next week, that should give a clearer picture of commodity prices for thr rest of 2008. Hopfully, China is still a player.
