In the previous part of this series, we looked at the indicators of the Chinese copper industry. In this part, we’ll look at recent data points from Europe. Europe is a major market for copper producers like Rio Tinto (RIO), BHP Billiton (BHP), and Glencore (GLNCY).
The above chart shows the manufacturing PMI (Purchasing Managers Index) in the Eurozone. Markit releases PMI figures on a monthly basis. Readings above 50 generally indicate economic expansion, while a reading below 50 indicates a contraction. Manufacturing PMI in Europe was 52.2 in May, the highest since May last year. Manufacturing PMI in Europe (EZU) has held above 50 for more than two years. PMI above 50 argues well for future economic growth in Europe.
The automobile sector is among the major copper consumers. Germany is the world’s third largest copper consumer. Germany ranks as the largest automobile exporter. The United States and Japan are the other leading automobile exporters.
Vehicle sales in Europe have been strong over the last few months. In April, vehicle registrations in the European Union increased 6.9% year-over-year. According to estimates, copper content in an average mid-sized vehicle is around 50 pounds. Higher vehicle production in Europe is positive for the copper industry.
So far, we’ve looked at the state of the global copper industry. However, Freeport-McMoRan (FCX) also gets a major portion of its revenues from oil and gas. In the next part of this series, we’ll see the recent trend in energy markets.