The global economic slowdown has caused a rout in industrial metals markets, as it plunged below $8,000 a ton, its lowest since early 2021.
As a barometer of the world economy, the metal slumped by as much as 3.5% to $7,970. The London Metal Exchange has lost 50 a ton since the start of the epidemic, extending losses after its worst quarter. Investors are increasingly convinced that growth is about to fade with tighter monetary policy and an energy crisis centered on Europe.
There are mounting concerns around global demand, Wei Lai, an analyst with TF Futures Co., said by phone from Shanghai. The Chinese market will have a surplus of about 10% of the total supply in the next two years based on a scenario of a hard landing for the US and European economies, with the weak recovery in China unable to offset global declines in demand, according to an estimate from the broker.
Aluminum and zinc extended losses after the LME s index of six base metals racked up its steepest quarterly slump since the 2008 financial crisis, opening the second half on a gloomy note. Stocks and equity futures fell on Friday.
It is a rapid reversal from conditions early in the year when a combination of booming demand, logistics snarl-ups and production outages sent prices for metals including copper and nickel spiking. Many metals are still facing acute supply constraints, even as the storm clouds darken on the demand front.
Copper was at $7,981. As of 09: 03 a.m. local time, there was 50 a ton on the LME. The aluminum was down 2.4%, while the nickel was 5.4% lower. Iron ore fell in Singapore as a result of concerns that the Chinese government will mandate steel output curbs at a time of weak demand and rising inventories.
There are some bright spots for metals, as Chinese demand recovers from Covid lockdowns and the government boosts stimulus, including more cash for infrastructure spending. Manufacturing activity bounced back more strongly than expected as the nation's property market slumped in June.
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