Chinese manufacturing PMI Turnaround has been a key driver of the turn in copper prices

China’s manufacturing PMI rebounded to 51.6 in February (vs 51.3 in Jan and an average 51.5 over the previous 3 months).  The standouts were a rise in the export orders index to 50.8 – a 30 month high.  Likewise the import orders index rose to a 60 month high of 51.2.  Given the jump in import orders it’s therefore not too surprising to see commodities doing so well.  Indeed, as the second chart below shows – copper prices turned at around the same time as the China manufacturing PMI started to rebound.
As I noted in avideo last weekthe rebound in the manufacturing PMI along with rising property prices and inflationary pressures, there has been a shift in monetary policy from aggressive easing back in 2015-16 to now gradual and often stealth tightening.  There is a risk that they go too far and that global forces or structural challenges cause the PMI to turn down again, so it remains an important global macro indicator to stay on top of.
The February manufacturing PMI for China rebounded and the breadth improved significantly – a sign of solid underlying strength.

The turnaround in the Chinese manufacturing PMI has been a key driver of the turn in copper prices.

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Top Down Charts
Topdown Charts: "chart driven macro insights" Based in Queenstown, New Zealand, Topdown Charts brings you independent research and analysis on global macro themes and trends. Topdown Charts covers multiple economies, markets, and asset classes with a distinct chart-driven focus. We are not bound by technical or fundamental dogma, and instead look to leverage any relevant factor to capture the theme. As such, here you will find some posts that are purely technical strategy, some that just cover economics and data, and some posts that use multiple inputs to tell the story and identify the opportunities. Callum Thomas Head of Research Callum is the founder of Topdown Charts. He previously worked in investment strategy and asset allocation at AMP Capital in the Multi-Asset division. Callum has a passion for global macro investing and has developed strong research and analytical expertise across economies and asset classes. Callum's approach is to utilise a blend of factors to inform the macro view.