In afternoon New York trade on Tuesday copper for delivery in March dropped nearly 5% to a low of $2.5860 per pound in New York after falling below the psychologically important $6,000 a tonne level on the London Metal Exchange earlier in the day.
Copper is now trading at levels last seen July 2009, amid a general sell-off in commodities with the Bloomberg Commodity Index sliding to the lowest since 2002 and a renewed slump in the oil price.
The price of crude oil fell again on Tuesday, bringing year to date losses to 20%, following a near halving in the price last year. Copper is already down 8.7% in 2015 after a 14% retreat last year.
The fall in the price of the two raw materials which are central to the global economy, is being interpreted as leading indicators of slower growth this year.
More evidence on Tuesday of a deepening economic slowdown in China, the world’s top consumer of the red metal, added to negative sentiment.
China consumes almost half the world’s annual copper output, and data released on Tuesday showed the country’s trade with the rest of the world grew by only 3.4% in 2014 compared to a 7.5% government target. It’s the third year in a row that Beijing has fallen short.
On top of a trade slowdown, China’s GDP growth is expected to slow to 7% in 2015, which would be the slowest pace since 1990.
Copper’s slide deepened last week when a worse than expected 3.3% drop in factory gate prices in December was interpreted as further evidence of inactivity in the China’s real economy. Producer prices in China have fallen for 34 months in a row.
Some analysts saw strength in Tuesday’s trade data pointing to the fact that while the value of imports were lower volumes picked up sharply as Chinese industry and its State Reserves Bureau, made the most of falling commodity prices to stock up on oil, copper and iron ore.
Copper import volumes grew by 6% last year to reach a new annual record of 11.8 million tonnes, while iron ore imports at 932.5 million tonnes for the year were up by 13.8% compared to 2013, also an all-time high.
Image of Captain Copper, superhero created to teach kids about the metal, courtesy of Codelco.