China Slowdown Fears Hurt Base Metals ETFs

June 01, 2012


Weakening demand for steel and lower copper consumption in China may signal an economic slowdown, and the ETF market will clearly tell that tale if and when it begins to unfold, according to an article on ETF Trends.

If China, the largest producer of steel and biggest consumer and importer of the base metal, continues to face falling demand, it will heavily affect ETFs like the SPDR S&P International Materials Sector (NYSEArca: IRV) and the iShares S&P Global Materials ETF (NYSEArca: MXI), ETF Trends said.

The impact would ripple over into steel-exporting countries like Brazil and Australia—homes to Vale, Rio Tinto and BHP Billiton, which are the largest iron-ore-producing companies in the world, the article said.

Also, if the infrastructure bubble were to burst, copper would be the next metal to take a hit, the article said.

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