“Copper is flashing a recession warning,” says Myra Saefong in Barron’s. Prices have slumped to their lowest level since November 2020. They slumped by 22% in the second quarter, the metal’s worst quarterly performance since 2011. Considered an “economic bellwether” because of its role in everything from electronics to construction, copper’s tumble suggests a “sour outlook” for the world economy.
It’s not just copper, says Albert Edwards in a Société Générale note. Other “industrial commodity prices are in virtual freefall”, with aluminium and nickel down 19.6% and 28.5% respectively since their May peaks. “This is not so much a canary in the coal mine as… the recessionary gorilla charging towards us out of the mist.”
Metals markets have been rescued in the past by Chinese stimulus, but don’t count on it this time, says Bloomberg News. While Beijing is supporting local government spending on infrastructure, the help is not on the scale of the 2008 or 2020 stimulus. The debt-ridden property sector – a key source of demand for metals – remains fragile, while new infrastructure projects in “cloud computing, 5G networks and data centres are less materials-intensive than the... bridges and high-speed railways” that characterised previous stimulus cycles.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Optimists see metals’ slide as an early victory over inflation, but the win might not last. The selloff may reflect financial speculators reining in their bets, rather than a rebalancing of the underlying physical market. JPMorgan Chase reports that “in the week to 1 July about $16bn flowed out of commodity futures markets, bringing the total for the year so far to a record $145bn”. But in the physical market, “commodity stocks remain 19% below historical average at a time of tight production”.
-
Trump’s tariffs: what is he thinking and how should UK respond?Every right-thinking person knows that free trade is a surer route to the wealth of nations than protectionism, says Stuart Watkins. What is Trump thinking?
-
Barclays begins paying up to £100 compensation to customers after banking outageBarclays will pay up to £7.5 million in compensation to customers after its banking services were disrupted by an IT outage
-
The best ways to buy strategic metalsTips Weaker prices for strategic metals in the alternative-energy sector are an investment opportunity, says David Stevenson. Here, he picks some of the best ways to buy in.
-
How to invest in Latin America’s metal reserves – the key to reaching net zeroTips Latin America’s base metals are crucial to stabilising global greenhouse-gas emissions, says James McKeigue. Here, he picks the best ways to invest.
-
How to invest in copper, the most important metal in the worldCover Story As the world looks to electrify and try to move away from fossil fuels, copper looks set to be the biggest beneficiary. But how can you invest? Rupert Hargreaves analyses the sector.
-
Metals prices wobble on slowdown fearsNews The S&P GSCI index of 24 major raw materials has fallen back 9% since mid-June on growing fears of a recession, and copper has hit a 16-month low after losing 22% since a peak in early March.
-
How to invest in the copper boomTips The price of copper has slipped recently. But that’s temporary – the long-term outlook is very bullish, says Dominic Frisby. Here, he explains the best ways to invest in copper.
-
How to invest in the multi-decade boom in industrial metalsTips The price of key industrial metals has already begun to rise. The renewable energy transition will take them higher, says David Stevenson. Here's how to profit.
-
Copper is set for a long bull market – here’s how to invest in itTips Commodity prices have started to cool – with the exception of one industrial metal that is in short supply but is an essential ingredient in almost everything. Dominic Frisby picks the best ways to invest in copper.
-
How the London Metals Exchange saved the nickel short-sellers’ baconNews Short sellers were caught out as the price of nickel briefly soared to $100,000 a tonne. But the London Metals Exchange saved their skins by halting trading for more than a week.
