Copper falls to $7,500 per ton amid fears of global economic slowdown
As fears of a slipping global economy weighed on industrial metals, copper significantly sank to around $7,500 per ton and staying low for a long time.
Copper fell below $7,500 a ton as fears of a global economic slowdown pressured industrial metals and deepened their retreat from record highs.
Investors are worried about a number of factors that could affect demand, such as the European gas crisis and a slowdown in the US, as well as renewed virus outbreaks in China. Copper fell by 4.2% on Tuesday to its lowest level since 19 months ago; it also dropped by more than 2% on Wednesday. Aluminium, zinc and tin also slumped.
A new round of mass virus testing in Shanghai highlighted the concerns that China’s Covid Zero policy will slow down the recovery for the world's second-largest economy. The country was seen as a bright spot for demand, given government promises to boost growth this half.
The last quarter was the worst for metals since the great financial crisis in 2008, and July has brought little relief as fears of a recession have dominated markets. It's a rapid turnaround from March, when the LMEX Index of six metals soared to an all-time high amid fears that Russia's attack on Ukraine would fuel shortages.
Later on Wednesday, the Federal Reserve's minutes from its last meeting will be released for more information about its views on monetary tightening, before another interest rate decision in July. The latest estimates from Bloomberg Economics indicate that the probability of a US economic downturn is now 38%.
Copper fell by as much as 2.7% to $7,462 a ton on the London Metal Exchange before trading at $7,478 a ton by 1:01 p.m. in Shanghai. Aluminum dropped 0.9% and zinc was down 0.4%.
The downturn in metals is also hurting miners, with Rio Tinto Ltd. dropping 7% in Australia and BHP Group falling 5.5%.