Commodities were hammered lower last month, with major sector indices falling to a series of five and six year lows.
It was a weak end to a depressing July – most lower and looking battered, with a slowing China and the rising US dollar the major culprits.
And the start to August isn’t encouraging with the official survey of the health of Chinese manufacturing surprising by falling to a reading of 50 from 50.2 in July. The 50 point level divides expansion (above) from construction (below).
This survey from the Chinese government covers big companies and has been the most positive of the two monthly surveys of the country’s manufacturing sector – with export and domestic orders both falling, it suggests the economy slowed last month, which isn’t encouraging news for commodity prices.
Gold, copper, oil, metals and most soft commodities all saw prices weaken in July.
Surprisingly, iron ore was one of the few to rise. Prices gained more than 20% from a July low, they are still down 25 % from the start of the year. However a new 4% slide to $US53.41 tonne on Friday, the most since July 8, won’t help confidence today.
Oil stood out though with a whopping great slide last month.
At the close on Friday night, US West Texas Intermediate was down 2.9% on the day and 21% for the month.
It was US crude’s worst month since October 2008, when the GFC was erupting. WTI for September delivery fell $US1.40 to close at $US47.12 a barrel in New York. It was the lowest settlement since March 20.
In London, a similar story with Brent futures for September settlement slipping $US1.10, or 2.1% to $US52.21 a barrel. Prices slumped 18%, in July, the biggest fall since December.
Not helping confidence on Friday was a small rise in the number of rigs drilling for oil in the US last week and strength in the US dollar.
Gold meanwhile ended its sixth consecutive week in negative territory, but the price managed to bounce off its lows on Friday.
However, gold futures closed lower for its second consecutive month, losing 6.5% and ending July at its lowest point since February 2010.
Silver prices faired a little bit better than gold, as it managed to close the week in positive territory, settling at $US14.745 an ounce, up almost 1%, and ending a five-week losing streak. But silver ended July down 5.7% for the month.
Comex gold futures for August delivery rose $US6.50 at $US1,094.90 an ounce. December gold which is now the most actively traded contract, rose $US6.40, or 0.6%, to finish at $US1,095.10 an ounce after earlier trading as low as $US1,079.20.
July saw copper prices post their biggest monthly loss since January, largely due to concerns about future demand from China.
Comex September futures were down 1.35 cents, or 0.6%, at $US2.3635 a pound Friday night in New York. That was a loss of 8.2% over the month, but came after a 1.1% rise last week.
In London LME copper lost 9% in July. Tin stood out with an 18% surge in July because of new rules tightening restrictions on supplies from Indonesia. But aluminium, zinc and nickel all fell over the month.
