Copper fell to its lowest price in 19 months, with metals extending losses as global recession fears continue to damp the demand outlook for commodities.
Sentiment remains sour for industrial materials used in everything from construction to new energy vehicles. Copper, widely considered an economic bellwether, is trading well below $8,000 a ton after metals posted their worst quarterly slump since the 2008 financial crisis.
“Sentiment in US industry is becoming more gloomy, in other words; we interpret this as a sign that the US economy is losing momentum,” Commerzbank AG analyst Carsten Fritsch said in a report. “Concerns about a global recession continue to predominate on the metals markets.”
The chances of a US recession are now 38%, according to the latest forecasts from Bloomberg Economics.
Metal prices likely will drop in the medium to longer term, though a technical correction higher is possible in the near term, Citic Futures Co. said in a note.
For zinc, which is used to galvanize steel, prices also risk a further pullback, with top producer China set to ship its domestic surplus to western countries to fill the shortfall that’s emerged in the wake of Russia’s invasion of Ukraine. Deteriorating demand and China’s shift to becoming a net exporter is expected to alleviate tightness in the metal, according to UBS AG.
Copper fell as much as 5.1% to $7,597 a ton on the London Metal Exchange, its lowest since early December 2020. It settled at $7,670 a ton at 7:30 p.m. local time. Other metals followed suit, with aluminum dropping 2.9% and tin falling 2.3%. Nickel, the only metal on the exchange to see green today, rose 0.7%.
Precious metals continued the trend in the red, with gold down 2.2% in the face of a stronger dollar. Silver sank 3.7% while platinum dropped 2.5%.