Commodities: Oil and metals prices slide on China slowdown

Oil and metals prices were under the cosh on Monday following further evidence of a slowdown in China.

China’s gross domestic product expanded by 6.9% year-on-year in the third quarter, down from the 7% pace seen in the previous quarter although higher than the 6.8% that analysts were expecting.

“...third quarter GDP still argues for more policy easing from the People’s Bank of China,” according to Rabobank analysts. “One more 25 basis point cut (down to a deposit rate of 1.50%) looks almost certain by year end, as do further cuts to the bank reserve requirements ratio.”

Following the report, the US dollar strengthened against the Chinese yuan while mining and oil prices fell on concerns of less demand from the world’s second biggest economy.

At 1452 BST on the Comex, gold fell 0.63%, silver dropped 1.36% but spot platinum was up 0.30%.

Base metals were also in the red on the LME’s three-month futures contract including copper (-0.5%), lead (-0.7%), nickel (-0.7%), tin (-0.6%), zinc (-0.9%) and primary aluminium (-0.3%).

Brent crude futures fell 2.5% to $49.21 per barrel and West Texas Intermediate was down 1.8% to $46.39 per barrel at 1534 BST. The slump was driven by China slowdown concerns and a downgrade by Moody's to 2016 oil estimates. Moody's downgraded its price assumption in 2016 for Brent crude to $53 per barrel, down from $57, while WTI was cut to $48 from $52 per barrel.

Reports of a possible nuclear deal between the West and Iran this year also weighed on the oil sector.

In agriculture, commodities were mixed: CBOT corn (-0.27%), wheat (-0.20%), ICE cocoa (+0.35%), cotton (+0.14%) and live cattle (+2.11%).