Copper touches lowest since November as demand outlook darkens

New York | Copper briefly tumbled to the lowest in almost 11 months, offering fresh evidence that soaring borrowing costs and slower spending are beginning to bite in all corners of the industrial economy.

Prices for the metal – viewed as a bellwether for the global economy – slumped as much as 1.2 per cent to $US7856 a tonne on the London Metal Exchange, falling through the bottom of a tight trading range that has held through much of the year. Prices subsequently clawed back losses and were trading little changed as the market close approached.

Until recently, mounting worries about weak global manufacturing activity have been partially offset by threats to supply. But prices have been grinding lower in recent months as a rebound in inventories signals that production is now starting to shoot ahead of demand.

LME-tracked stockpiles of the metal – needed both for the energy transition as well as mainstay, old-economy needs – jumped to the highest since October 2021 last week. The copper market has also moved into a wide contango, a condition where spot prices trade at discounts to futures, typically because consumption is weak.

At a macroeconomic level, the pressure on copper has intensified as soaring interest rates and persistent anxiety about Federal Reserve policy spur a rally in the $US, which makes raw materials more expensive for buyers in other currencies.