The price of copper was hammered on Friday amid an escalating trade war between the world’s two largest economies and a global economic slowdown.
In early afternoon trading in New York, copper for delivery in July touched a low of $2.5685 a pound ($5,660 a tonne), down 3.6% from Thursday’s settlement to its weakest point for 2019.
Copper is now trading 23% below levels seen in June last year, technically placing the bellwether metal in a bear market.
US President Donald Trump said on Thursday he would impose an additional 10% tariff on $300 billion worth of Chinese imports, starting September 1, meaning effectively all Chinese exports are now subject to tariffs of at least 10%.
Chief commodities economist Caroline Bain of independent research firm Capital Economics says “the chances of a compromise deal are remote given that China is unlikely to accept US demands for a fundamental change to its industrial policies:
We anticipate that all Chinese exports to the US will be subject to a tariff of 25% by mid-2020.
While we forecast that a full-blown trade war would mean that the level of global GDP would be 0.5% lower than it would otherwise have been by end-2020, we think the impact on metals demand will be more severe, which is a key reason why we expect most metals prices to fall further this year.