- Copper futures fell to a four-month low on worsening macroeconomic backdrop.
- Earlier forecasts of high demand from China have not played out, as its sectors see limited growth.
Copper, an economic bellwether commodity, recently hit a four-month as China's recovery has underwhelmed.
After a spike to begin 2023 and estimates calling for a 33% surge through the next year, copper prices on the London Metal Exchange closed Friday at $8,275 per metric ton, the lowest level since January 4 and down 12% from highs reached January 18.
Copper fell into a bear market last year, when it plunged more than 20% from its peak above $10,700 a ton reached in May 2021.
The latest slump comes as manufacturing, real-estate and other copper-oriented sectors in China have failed to resume pre-pandemic activity, unlike the service sector.
First-quarter net inflows of refined copper dropped by 16% year-over-year, while manufacturing output shrank last month.
The outlook for the global economy over the medium term is also weakening. Last month, the International Monetary Fund predicted global growth five years from now will be about 3% — its lowest such forecast since 1990.
The IMF also trimmed its growth forecasts for 2023 and 2024 to 2.8% and 3%, respectively, from prior views for 2.9% and 3.1%.
Meanwhile, earlier fears of tight inventory have eased as production impediments in Peru, Chile, the Democratic Republic of Congo, Indonesia and Panama are clearing up, according to the Wall Street Journal.
The downslide is reinforced further by more short interest. In just three weeks, short positions grew by 68%, while long positions scaled down, Reuters reported.
Analysts at Morgan Stanley see the slump continuing and said copper could end the year at $7,800 a metric ton.