Copper prices have plummeted below $9,000 a ton for the first time since early April, as the global stock market faces a selloff and concerns about demand in China and other markets. The industrial metal has experienced a 20% decline since its mid-May record high, impacted by growing inventories and weak conditions in the Chinese spot market.
The drop in copper prices can be attributed to the metal’s close relationship with industrial production, making it a key indicator of economic health. Dubbed as “Doctor Copper”, the metal’s price is seen as a predictor of the overall economy.
The recent market downturn has been exacerbated by a significant selloff in global technology stocks and doubts surrounding the growth of the artificial intelligence industry. Following a record high in May, copper prices at the London Metal Exchange have been steadily declining.
Despite recent rate cuts by China’s central bank aimed at reviving the economy, copper prices continue to slide, marking the worst weekly slump in nearly two years. Additionally, China’s refined copper exports reached a record high in June, driven by weak domestic demand leading smelters to seek overseas markets.
While there are concerns about the softening demand outlook in China, there is optimism for copper demand in the clean energy sector. With prices falling below the $9,000 threshold, scrap merchants are less willing to supply, leading to low inventories. End-use demand indicators for electric vehicles, solar installations, and grid investments are positive, pointing towards potential growth in copper demand in green energy sectors.
However, the future of copper prices remains uncertain, as analysts expect further declines in the near term. Despite short-term pressures, the industry may see growth as governments and businesses invest in decarbonization efforts, potentially increasing demand for the essential metal. Miners will need to adapt to these trends to meet the growing demand for copper in the transition to clean energy.
