COPPER PRICES FALL ON RECESSION FEARS

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As of 23 June, copper prices had fallen 14 percent this year to end at $8,387 a ton, the Financial Times reported, as fears of a recession deflated the outlook for industrial metals.

As we have previously noted, copper is often referred to as “Dr. Copper” because it is reputed to have a Ph.D. in economics due to its ability to predict trends in the global economy because it is used in almost every industry.

As copper goes, so goes the world economy.

Copper prices shot to record highs last year, as we reported in our “U.S. Markets Overview” section of 11 May, 2021, and surged again after Russia invaded Ukraine.

Now they have slipped as central banks have jacked up interest rates and China stands ready to reimpose drastic lockdowns if the COVID virus returns, the FT said.

“Metals have given up their year of gains, with aluminum and copper touching yearly lows” last week, Ehsan Khoman, MUFG’s head of emerging markets research, told the FT.

“Zinc and nickel [are] not too far behind as Chinese demand and higher-than-expected Russian supply is depositing more [copper] onto European exchanges,” he said.

Falling metals prices have dragged down share prices for mining companies this month. Rio Tinto’s market value has lost about 13 percent and Anglo American has shed more than 18 percent.

In June, Europe’s S&P Global manufacturing purchasing managers index (PMI) slipped from 54.8 in May to 51.9 in June. Readings above 50 signal expansion; ratings below 50 indicate contraction, as we report in “European, U.S. Economies Drag Through June” in this issue.

TREND FORECAST: The global economic slowdown and Dragflation, our Top 2022 Trend now under way, will bring metals prices lower. However, demand will remain above mines’ and processors’ capacities to meet it.

Therefore, many metals prices will not return to pre-COVID levels.

See “TRENDS ON THE ECONOMIC AND MARKET FRONT” in this Trends Journal for more data on Dr. Copper and its implications.

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