Data from the statistics bureau showed that copper supply shortfalls may deepen should growth accelerate. China’s official purchasing managers’ index increased to 50.5 last month, the highest since September.

India’s manufacturing grew at the fastest pace in 8 months in January, HSBC Holdings Plc and Markit Economics reported the same day. The Institute for Supply Management’s US factory index rose to the highest level since June last month.

Raw materials are rebounding from the first annual drop in three years on growing signs the world will skirt another recession and reports that manufacturing is expanding from China to India to the US Investors are betting record low US interest rates and China’s efforts to shore up growth will bolster demand. The optimism is being tempered by Europe’s widening debt crisis with the International Monetary Fund warning it could derail the global economy.

While global growth may be slowing, the consumption of commodities is expanding faster than supply. Morgan Stanley predicts shortages in copper, palladium and iron ore this year and Barclays anticipates the same thing for tin. The London based bank also expects oil inventories to drop in the third and fourth quarters as production falls short of demand. Rabobank International forecasts deficits in coffee and cocoa.

China’s economy will expand 8.1% this year and up to 8.7% in 2013. China’s economic growth will decelerate to around 8.1% this year and edge up to 8.7% in 2013.

China’s manufacturing activity is far from optimistic despite the Country’s Purchasing Managers Index for the manufacturing sector rose slightly in January.

The China Federation of Logistics and Purchasing has said that China’s PMI rose to 50.5% in January, the highest level since October. The PMI stood at 50.3% in December and 49% in November.

(Sourced from www.livetradingnews.com)