Business Maverick: Copper Suffers Worst Week in a Year on Recession Fears

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Copper reversed losses alongside a broader rally across markets after data showed the lowest reading in a year for longer-term inflation expectations. But the red metal is still set for a 7.6% loss this week, the steepest weekly decline in a year.

Metal prices endured one of the worst weeks since the coronavirus pandemic began, with economic bellwether copper dropping as much as 3% to below $7,000 a ton earlier Friday. Most other base metals rebounded after falling earlier. Copper is still down about 33% from a record high set just four months ago when metals were soaring on concerns about supply in the wake of Russia’s invasion of Ukraine at a time when consumption remained hot.

It’s unlikely that China will “enter large scale lockdown measures again, especially as the government moves to set up more available mass testing PCR stations across the country ,” StoneX analyst Natalie Scott-Gray said in an emailed note. “The industrial sectors should be able to avoid shutdowns; however, the fear here is, that as new variants emerge, while their impact on health is less severe, their speed of contagion seems to grow.

“Unfortunately, right now trying to locate a hard bottom in copper is proving to be a difficult task,” Phil Streible, chief market strategist for Blue Line Futures LLC, said by phone. “China, rates, recession fears and supply chain issues are still there. The dominoes are falling.”since the country was first hit by the pandemic two years ago, underlining the impact of a Covid-Zero approach and a prolonged real-estate squeeze.

 

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