Copper price hits a 20-month low on recession fears

Antofagasta’s Los Pelambres copper mine in Coquimbo Region, north-central Chile. (Credit: Consejo Minero)

Copper prices hit a 20-month low on Monday as persistent worries that a recession would dampen metals demand hit a market with thin summer volumes.

Copper for delivery in September fell 3% from Friday’s settlement, touching $3.41 per pound ($7,517 per tonne) Monday morning on the Comex market in New York, the lowest since November 2020.

Click here for an interactive chart of copper prices

“The dollar strength was the trigger that came on top of the recent recession fears, pulling the rug from under the market,” said Ole Hansen, head of the commodity strategy at Saxo Bank in Copenhagen.

“This is the time of year where the market can easily get caught on the wrong side when liquidity is drying up.”

China is fighting covid-19 flare-ups on multiple fronts across the country including an emerging cluster in Shanghai, spurring mass testing drives and fresh restrictions.

“Money manager positioning on the CME copper contract is as bearish as it has been since the first quarter of 2020 when industrial metals prices collapsed as China, followed by just about everyone else, went into covid-19 lockdown,” wrote Reuters columnist Andy Home.

“High energy prices are having a chilling effect on previously robust manufacturing activity in Europe and the United States. Central banks are lifting interest rates to tackle inflationary pressures, which is bad news for all risk assets. And the dollar is super-strong, which is particularly bad news for dollar-denominated metals such as copper.”

(With files from Reuters)