China's Property Index Forecasts A Plunge In Copper Prices

The Business Insider ^ | 6-13-2010 | The Pragmatic Capitalist

[blam]

China's Property Index Forecasts A Plunge In Copper Prices

The Pragmatic Capitalist
Jun. 13, 2010, 7:58 PM

Bloomberg’s chart of the day shows the very high correlation between the Chinese property market and copper prices. Property prices have been a reliable leading indicator of economic activity in China and commodity prices. If the Chinese property market is telling us anything right now it’s that global economic activity could be due for a dip in the coming months:

The CHART OF THE DAY shows the Shanghai Property Index of Chinese developer stocks, which has led moves in copper prices since 2007, is falling. Concerns among investors that China will introduce policies including a property tax to curb home prices drove a 29 percent drop this year in the index of 34 real-estate companies traded in Shanghai. China makes up 27 percent of world copper demand, Goldman Sachs Group Inc. said in January.

“There could be further downward pressure on the copper price,” MF Global analyst Jeremy Cave wrote in a report. “Over 40 percent of copper is used in construction, so the relationship with Chinese property markets is clear.”

This guest post previously appeared at the Pragmatic Capitalist >

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[2banana]

Alot of copper is mined at the same time as gold.

Seems like there is going to be lots of supply and smaller demand...

[norraad]

A combination of "We don't need anymore crap , we have everything already!" and all the people recycling copper out of all the broken thrown away crap, a cooper glut is growing.

Kinda like if half that oil in the Gulf made it to the refinery gas would be a dollar a gallon.

[blam]

This Is The Only Question Investors Need To Be Asking Themselves Right Now

[Rebelbase]

Too late to save those inner city vacant homes that have already been stripped.