Copper sinks below $9,000 as metals slide on global demand fears
Copper plunged below $9,000 a ton for the first time since October and other metals slid on mounting worries about weak global demand.
Often seen as a barometer of the world economy, copper has slipped 15% from a record high set in March as investor focus shifts from concerns about tight supplies to weaker consumption. Fears are rising that U.S. monetary tightening, shaky European economies and stringent Covid-19 measures in top user China will hurt metals demand.
The metal dropped as much as 4.3% to below $9,000 a ton on the London Metal Exchange on Thursday before paring loss as sentiment soured across financial markets. Other metals also slid, with tin tumbling more than 10%, the most in two months.
“Commodities are now ‘catching up’ to Wednesday’s equity rout in Thursday’s session, with other variables helping the selling along as well,” said Ed Meir, an analyst at ED&F Man Capital Markets. “Charts in all six metals look broken,
with no semblance of an uptrend remaining in any of them.”
Elevated U.S. inflation has bolstered the case for the Federal Reserve’s aggressive push to rein in price pressures, which is heightening concerns of a recession. Officials are striking an increasingly hawkish tone, which has rattled risk assets across markets.
In China, Premier Li Keqiang urged officials to use fiscal and monetary
policies to stabilize employment and the economy, as the nation fights its worst Covid outbreak in more than two years and a debt crisis in its real estate sector. Meanwhile in Europe, concerns are growing about disruption to gas supplies from Russia, which could further hamper the continent’s industrial economies.
“So many bad things are stacking up,” said Tom Price, head of commodities strategy at Liberum Capital. “China’s economy was
struggling coming into this year and then they got hit by Covid.”
Slowing demand has also seen copper inventories recover from dangerously low levels reached in March. LME stockpiles rose to the highest since October on Thursday amid inflows into warehouses in Europe and Asia.
Copper was down 3% at $9,063 a ton by 3:30 p.m. on the LME. Other metals also traded lower, including tin, zinc and aluminum.