Copper Industry April Update (Part 10 of 10)

(Continued from Part 9)

Previously in this series, we discussed Chinese indicators, the US economy, and how each of these variables affects copper. In this part, we’ll analyze the latest European economic data.

Investors in Vale (VALE), Stillwater Mining (SWC), and BHP Billiton (BHP) should keep an eye on the European markets. Europe (VGK) accounts for almost one-fifth of global copper consumption. The iShares MSCI EAFE ETF (EFA) seeks to invest in developed markets equities excluding North America. It has invested in several major European companies.

March vehicle registration in the EU (European Union) increased by 10.3% on a year-over-year basis, as you can see in the chart above. Apparently this is the highest growth rate in the last year.

The automobile sector is a major consumer of copper products. Higher vehicle sales in Europe are positive for the copper industry.

PMI figures are released on a monthly basis by Markit. Readings above 50 generally indicate economic expansion, while a reading below 50 indicates a contraction. European PMI was 52.2 in March, the highest it’s been since May last year. Manufacturing PMI in Europe has held above 50 for several months. A PMI above 50 augurs well for future economic growth in Europe.

For more on the latest developments in Europe, read How Europe’s QE Could Be a Stimulus for US-based Investors.

The latest economic data point to a recovery in the European economy. However, there are still several sectors, such as housing, where demand is weak. The EU construction confidence index has been negative for several months now. The contagion effect of the Greek situation is another potential risk for the Eurozone.

You can learn more about the copper industry by visiting our Copper page.

Browse this series on Market Realist:

• Part 1 - Copper Industry Gets a Lift in 1H2015
• Part 2 - Supply Disruptions in 2015 Support Copper Prices
• Part 3 - Chilean Refined Copper Production Falls to 2-Year Low