Falling copper prices signal another recession

Falling copper prices signal another recession

Falling copper prices signal another recession

Falling copper prices

Advertisement
  • Some investors view copper prices as a leading indicator of the world economy.
  • The metal is found in a variety of building elements, including electrical cables and water pipes.
  • Copper prices have decreased by more than 11% in two weeks.
Advertisement

Some investors view copper prices as a leading indicator of the world economy. If you are one of them, you have reason to be concerned.

What’s going on: copper prices fell to a 16-month low as traders unloaded the commodity. They’ve decreased by more than 11% in two weeks.

“Copper prices are just starting to account for the fact that global growth is slowing,” Daniel Ghali, director of the commodity strategy at TD Securities, told.

Read More: Euro retreats as recession prospects grow

The metal is found in a variety of building elements, including electrical cables and water pipes. As a result, it’s frequently used as a proxy for economic activity, as demand tends to rise as the economy expands and falls when it contracts. Because of its supposed ability to predict the future, traders lovingly refer to it as “Dr Copper.”
After Russia invaded Ukraine earlier this year, the price of copper and other important metals skyrocketed.

Advertisement

According to S&P Global, Russia accounts for 4% of global copper output and nearly 7% of global nickel output. Traders were concerned that supply would run out just as the economic recovery from the pandemic began, so they began hoarding aggressively.
Prices are now moving in the opposite direction as recession worries take root.

“Once that stockpiling impulse ended, then global commodity demand started to reconnect with global growth,” Ghali said.

First estimates of economic activity confirm that rising food and fuel prices are slowing the economy.
S&P Global’s Purchasing Managers’ Index indicated private-sector output slowed “sharply” this month.

Read More: European stocks open downward after Fed issues a recession warning

Advertisement

“Having enjoyed a mini-boom from consumers returning after the relaxation of pandemic restrictions, many services firms are now seeing households increasingly struggle with the rising cost of living, with producers of non-essential goods seeing a similar drop in orders,” said Chris Williamson, a chief business economist at S&P Global Market Intelligence.

“Over the medium term, copper prices do have more room to fall, especially as we stare down the barrel of a recession,” Ghali said.

Advertisement
Advertisement
Read More News On

Catch all the Business News, Breaking News Event and Latest News Updates on The BOL News


Download The BOL News App to get the Daily News Update & Follow us on Google News.


End of Article

Next Story