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HomeUncategorizedMetals Market Goes Through Worst Price Crash in Decades

Metals Market Goes Through Worst Price Crash in Decades

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Copper, zinc, aluminum and tin have all experienced a drastic drop in the stock market in recent weeks or months.

Metals have been more affected than other raw materials by the imbalance of the markets after the imposition of Western sanctions against Russia and Belarus, in response to the military operation launched by Moscow in Ukraine.

The analyst Mark Burton of the Bloomberg agency exposed in a article published this Sunday current trends in the sector and the dynamics for various metals. The key factors influencing this crisis are a reduction in manufacturing activity in China and, more recently, in Europe, in addition to the global concern about an industrial slowdown in the main economies.

In particular, copper hit a 16-month low of $8,122.5 a tonne on the London Metal Exchange on Friday, with a 11% drop so far in June , heading for one of the largest monthly losses in the last 30 years.

Other metals, from aluminum to zinc, have also slumped and the Bloomberg Industrial Metals Spot Sub-Index is down 26% this quarter , something that may become the biggest drop since the end of 2008, when the economy was going through a global financial crisis. Meanwhile, tin prices have more than halved since their peak last March, and between June 20 and 26 this heavy metal has just fall 21%, this being their worst week since the crisis of the 1980s.

The mood in the sector is negative even as the lockdowns due to the latest outbreak of covid-19 in China begin to relax, and there are signs that traders are betting copper prices will fall further, notes the Bloomberg article.

“Even if China recovers in the second half, it will not be able to push prices back to new highs on its own, that era is over,” said Amelia Xiao Fu, chief commodity strategist at BOCI Global Commodities. “If other major economies head into recession, China will not grow at exceptional rates either,” he added.

The agency’s analysis also highlights a bearish psychological shift in the Chinese market, where demand has not decreased, but on the contrary, interest in copper contracts has increased considerably in the Shanghai Futures Exchange during the sharp drop in prices. Traders are trying to sell metal stocks as quickly, instead of selling bullish positions.

Beyond China, S&P Global indicators showed on Thursday that European industrial production contracted for the first time in two years, while in the US production reached a minimum 23 months.

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