Copper will be most vulnerable in the case of the crash of the Chinese economy - Barclays

Barclays Capital economists consider it very likely that China’s quarterly growth can fall to 3 percent over the next three years. According to the bank, the most vulnerable to Chinese ups and downs of metal is copper, which will lose more than the rest, as it is traded with the least profitability. In addition, China is invested in this metal the largest amount of borrowed funds due to large import needs.

While the fundamental review of Barclays Capital economists still shows 7.4 percent of China GDP growth in 2013 and 2014, a recent deterioration in liquidity and slowing down the growth of the second economy of the world can significantly increase risks.

Barclays Capital analysts simulated a situation in which the Chinese economy will slow down to 3-4 percent growth. In this case, they believe, the demand for copper in the region of 4 percent will fall and the market will fall into the market in the amount of 1 million tons after the current 100 thousand. In addition, investors will consider a slowdown in the Chinese economy as a signal for the sale of copper. Under the pressure of a huge excess offer and the price of copper, which is spurred by investors, can more than double.

Thus, the lower price threshold of copper in the basic script Barclays Capital may be lower than the crisis of 2008. For aluminum, there is a rescue circle in the form of a memorandum of mutual understanding, signed by the largest manufacturers in order to reduce its global production. Therefore, the lower barrier for falling aluminum prices in case of problems in China is a bar of $ 1234 or minus 30 percent of the current price. Lead will fall to $ 850 per ton, and zinc is up to $ 1,000 per ton, which is 40 and 50 percent less than current levels, respectively.