(Bloomberg) -- Copper tumbled — falling below the US$9,000-a-ton threshold for the first time since early April — on the back of a selloff in global stock markets and rising pessimism about the outlook for demand in China and elsewhere.
The industrial metal is down by about a fifth since reaching a record in mid-May, with bold, bullish bets on tightening supply and a looming surge in usage giving way to deepening worries about rising inventories and weak conditions in the Chinese spot market.
A heavy selloff in global technology stocks also is raising doubts about the strength of the burgeoning artificial intelligence industry, after investors piled into copper on a bet that usage would surge in data centers and associated power infrastructure.
Tin — a metal predominantly used as solder in electrical and electronic applications — slumped as much as 3.3 per cent, leading declines on the London Metal Exchange.
Pessimism about China’s growth trajectory worsened after last week’s Third Plenum — a key meeting of Communist Party officials — failed to deliver the type of stimulus that would support metals demand. Copper fell even as China’s central bank cut a one-year policy loan rate Thursday, just days after reducing another rate, in a bid to revive the economy.
“Concerns around the global growth remain, and that may drive copper lower,” said Gong Ming, an analyst at Jinrui Futures Co. Still, prices may see support around $8,900 with supply risks looming, she said, referring to possible output cuts in China.
Copper dropped as much as 2.2 per cent to $8,900 a ton and was trading at $9,010 as of 10:47 a.m. London time. Nearly all metals were lower on the LME, with tin declining 2.6 per cent and zinc losing 1.5 per cent.
Iron ore declined 0.9 per cent to trade below $100 a ton in Singapore, extending losses on signs that supplies will stay robust.
“In China, steel margins have remained in negative territory, indicating that steel demand is weak, and mills see no reason to keep production elevated or to build stocks of raw materials,” Liz Gao, senior iron ore analyst at CRU, said in an emailed note. “Meanwhile, supply was exceptionally high in Q2.”
©2024 Bloomberg L.P.
