Copper Price: More Proof Of A Looming Recession?
Is Copper Price Foretelling Economic Doom?
One thing is for certain…
Industrial metals suffered mightily last year. But nowhere is the pain more obvious than in the copper market. The price of red metal has fallen nearly 30% over the past year and is down 50% since early 2012.
And get a load of this…
Copper, which is a great indicator of economic activity, just fell below $2 a pound.
That’s the lowest price this metal has seen since early 2009, during the depths of the financial crisis.
What’s going on?
As we’ve discussed many times over the past few weeks, the Chinese economy isn’t faring so well. The country is mired in a steep growth slowdown that’s worrying investors the world over.
Since China consumes around 45% of annual global copper supply, there’s obvious concern over end demand of the metal. After all, if China’s economic growth is stumbling to new multi-decade lows, consumption of the economically sensitive metal will slow meaningfully.
Remember, copper is used in everything from home construction to high technology. As a result, the metal is often looked upon as a gauge of global economic health.
Judging by the following chart, the global economy is getting quite shaky…
As you can see, copper is still stuck in a dramatic downtrend. Given the technical and fundamental situation, a retest of the late 2008 low near $1.30 a pound isn’t out of the question.
Of course, that’s bad news for producers like Freeport McMoRan $FCX and Southern Copper $SCCO.
In fact, heavily indebted $FCX plummeted to its lowest price in 13 years earlier this week.
That’s right, shares of the world’s largest listed copper miner have broken below the lows set in the 2009 financial crisis.
Folks, that’s a downright scary situation. And it further proves that there is something seriously amiss in the global economy.
Bottom line…
As I’ve been mentioning the past few weeks, the drastic downturn in commodities and the companies producing them are sending a clear warning signal about the health of the global economy.
We could be in for a major market downturn in 2016.
Until Next Time,
Justin Bennett
BIO: Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com. With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them. Sign up for our free reports and commodity newsletter at https://commoditytradingresearch.com/free-sign-up.
Category: Commodity Trading, Copper
