BORSAGUNDEM.COM – FOREIGN NEWS SERVICE
Fears of a recession surrounding the world economy cause historic falls in metal prices. Industrial metals are in their worst quarter since the 2008 economic crisis after prices were hit by recession fears. Industry-leading copper entered bear market territory from record highs four months ago, while tin had its worst week since the 1980s, when it disrupted London trading for four years, dropping 21%.
a great retreat
According to the news from Bloomberg’s Mark Burton, this decline means a big return of metals which have risen with the general optimistic mood, inflationary forecasts and the prevailing supply shortage following the pandemic process. Inflation is still high today and supply is still tight, but the expected slowdown in industrial activities in major economies coupled with falling demand in China, metal prices appear to have taken their share of these negative developments.
Borsagundem.comAccording to information gathered by, the decline in the price of a metal used in a wide range of products, from heavy industry machinery to high-tech products such as copper, shows that the market is going through a period that is heavily dependent on economic changes. . This situation also shows that efforts to control commodity prices have produced positive results right from the start. Even as pandemic quarantines begin to ease in China, the deterioration in the metals market shows signs of further decline in copper prices.
Amelia Xiao Fu, Head of Commodity Strategy at Chinese investment bank BOCI Global Commodities, says that while China is likely to recover in the second half of the year, it won’t be enough to push metal prices higher. . “While other large economies are drifting into recession, China will be no exception,” Fu says.
Even as pandemic quarantines begin to ease in China, the deterioration in the metals market shows signs of further decline in copper prices.
Copper demand is expected to face severe risks on multiple fronts in a broad recession. The slowdown in manufacturing activities in China has also affected Europe. According to data from S&P Global, the European manufacturing industry has contracted for the first time in the past two years. At the same time, US manufacturing figures recorded the lowest level in the past 23 months.
Furthermore, the magnitude of the high-acceleration sales of copper and other industrial metals also indicates that investors are seeing dark clouds in the near future and expect much sharper decreases in demand for industrial metals in the coming weeks. Metals have been hit harder and harder than commodities like food and energy, where supply and trade have been hit hardest by the Russian invasion of Ukraine. While the energy index has risen 10 percent since March, the agricultural index has fallen by 9.7 percent.
Strict supply conditions
In assessing this metal situation, it must be admitted that the markets for copper and many other metals are facing the tightest supply conditions ever. Falling stocks globally and the paucity of new supply signals have also caused copper loyal investors like Goldman Sachs to warn that the destruction of demand may be necessary to bring prices down a bit.
The possibility of a recession has accelerated sales in the metals markets.
It started with the Fed rate hike.
The decline in industrial metals began earlier this month with the Fed’s decision to raise interest rates by 75 basis points. The possibility of a recession following this move has caused an acceleration of sales in the metals markets.
The Fed warns that it has little effect on the supply drivers that drive prices for commodities like crude oil, while demand for essential goods like gasoline and food will remain resilient as pressures rise to finance consumers. But there are fears that Fed rate hikes could have a much faster impact on discretionary spending. This is expected to cause a rapid slowdown in the high demand for metals in sectors such as real estate, automotive and durable goods. Manufacturers are believed to be highly likely to cause demand to decrease in sectors such as construction and industrial machinery in the face of rising borrowing costs.
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