Copper prices have plummeted to their lowest levels in 4.5 months, driven by a deteriorating demand outlook in China and the United States, the world’s two largest economies. The decline has been exacerbated by signs of stalled industrial activity in China, which has led to a 20% drop in prices since reaching record highs above $11,100 in May.
On the London Metal Exchange (LME), benchmark copper traded down 3.3% at $8,756 per metric ton, marking its lowest point since March 13. Contributing to the negative sentiment were a weak U.S. jobs report and disappointing earnings from major technology companies, which have undermined confidence across commodity and equity markets.
Analysts note that these markets are interconnected, with macroeconomic themes influencing both metals and energy sectors. European shares have fallen to multi-month lows, while Japanese shares faced significant losses amid U.S. recession fears.
Despite expectations for deeper interest rate cuts by the Federal Reserve, which could support demand for dollar-priced metals, the immediate concern in the copper market is rising inventories in LME-approved warehouses, which have surged over 140% since mid-May to reach three-year highs of 251,350 tons.
Additionally, lead prices have also fallen, hitting a nine-month low due to weak demand and high stocks.