Copper price crashes through $3 a pound
In afternoon New York trade May copper changed hands at just under $2.9560 a pound the lowest level for the most active futures contract since July 2010.
On the back of dire economic news out of China – responsible for 42% of total global copper demand – the price of copper has plummeted more than 8% since just this Friday.
Data released over the weekend showed Chinese overall exports slid a stunning 18.1% year-on-year and imports of copper fell 30% in February from the month before.
Given its widespread use in transportation, manufacturing and construction the weakness in China is having a significantly negative impact on underlying copper demand.
But the current slump has been exacerbated by distortions in the Chinese market for copper where the red metal is often used as collateral for loans.
Last week Choari Solar became the first Chinese company in history to default on a corporate bond, sending shivers through Chinese industry and sparking fears of a knock-on effect.
The worsening credit situation in the country could see the copper market enter a vicious circle.
Borrowers, forced by their bankers to repay loans will have to sell the metal into an already well supplied market and in the process pushing down market prices even further.