The markets appear to be slowing in both Australia and New Zealand. Metal merchants are reporting lower volumes passing through their doors, with slowing demand from some consumers as well. A slight slowdown is not uncommon as we move into the winter months but, at current LME levels, there was an expectation of slightly better inflows.
The outlook for the Australian economy is not brilliant, with inflation for the first quarter recorded at 0%. This had an immediate impact on the Australian dollar which dropped in response to the news. Prices are still falling in the Australian housing market, wage growth is low and the unemployment rate is now 5%.
The New Zealand economy is also slowing but is expected to bottom out around the middle of 2019. Business investment may remain subdued as a result for some time. There are still market expectations that the Reserve Bank will introduce further cuts to the Official Cash Rate towards the end of this year to help stimulate the economy.
Hayes Metals (NZL), Vice-President of the BIR Non-Ferrous Metals Division