Copper dropped over 3% on Wednesday after worries about economic growth and metals demand were reinforced by the International Monetary Fund downgrading again its global growth projections for this year and next.
The metal, highly sensitive to economic outlooks because of its widespread uses in construction and manufacturing, came close to the lowest level it reached in October 2011, dipping into bear-market territory.
In January — the last time the IMF provided an update — the world’s most influential economic group expected global economy to grow at a reasonable pace, slightly ahead of 2012’s pace.
Conditions have worsened further in the past three months, however, and the situation in Europe demands more “aggressive” action from policymakers, the IMF said.
The IMF also stated that China’s growth this year is likely to clock in at 8%, which is a 0.2% lower than what predicted earlier.
The announcement had a direct impact on benchmark copper, which dropped to its lowest level in a year and a half on Monday, at $7,085 a tonne.
It also impacted giant miners, such as BHP Billiton, which delivered a production update for the first quarter that was generally weaker than expected.
The red metal has lost more than 8% this year.
(Image of copper sculpture from Flickr Commons)