Copper tumbled below $7 500 a ton as fears of a global economic slowdown piled pressure on industrial metals and deepened their retreat from record highs just months ago.
Investors are fretting over a range of threats to demand, from Europe’s gas crisis to a US slowdown and renewed virus flare-ups in China. After a 4.2% slump on Tuesday to its lowest close in 19 months, copper fell more than 2% Wednesday. Aluminium, zinc and tin also tumbled.
A fresh round of mass virus testing in Shanghai underscored concerns that China’s Covid Zero policy will complicate the recovery for the world’s second-biggest economy. The country was seen as one of the brighter spots for demand, given government pledges to reboot 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 dominate 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.
Minutes from the Federal Reserve’s last meeting are due later Wednesday for more clues on the bank’s thinking about monetary tightening, ahead of another rates decision in late July. The chances of a US economic contraction are now 38%, according to the latest forecasts from Bloomberg Economics.
Copper fell 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. Aluminium dropped 0.9% and zinc was down 0.4%
The sell-off across metals is also slamming miners, with Rio Tinto shedding 7% in Australia and BHP Group down 5.5%