Click here for an interactive chart of copper prices
Morgan Stanley said the macroeconomic backdrop for the industrial metals sector had deteriorated as central banks’ fight with inflation escalates and China’s zero-covid policy continued to dampen demand for metals.
“Recession fears have become heightened,” said WisdomTree analyst Nitesh Shah.
“We are seeing a broad-based cyclical sell-off. It’s not just copper, not just industrial metals, it’s equities markets, too.”
Shah said that aggressive increases to interest rates could push copper even lower, but he expects prices to be significantly higher in five years because of rising demand for the metal as the world transitions from fossil fuels to electrification.
US Federal Reserve chair Jerome Powell on Wednesday said he is committed to bringing inflation under control even at the risk of an economic downturn.
“The [US Federal Reserve] is tightening aggressively. Holding copper’s getting expensive. The commodity world’s flagship is under fire,” said Tom Price, an analyst at Liberum.
(With files from Reuters)
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