Copper, iron ore plunge amid global growth risks
By Onome Amuge
Iron ore and copper tumbled into bearish territories as concerns over weakened Chinese steel production, weaker consumption data in the U.S and China, global growth risks and rising probability of reduced U.S. stimulus, disrupted metals markets.
Market reports showed that this week’s decline in iron ore prices was fast-paced, with futures tumbling as much as 12 percent on increasing fears that Chinese steel output and consumption will drop over the rest of the year, partly as authorities limit output to curb pollution.
In addition to this, analysts noted that metals markets have also been weighed down by worries that the Federal Reserve may soon start reducing massive stimulus that helped drive prices higher over the past year, as well as risks from the fast-spreading delta covid-19 variant.
Faced with the negative reports, copper, considered an economic bellwether, declined as low as $8,8786.50 during Thursday morning trading on the London Metal Exchange (LME).
Iron ore was down 12 percent at $131.40 per tonne in Singapore, while futures in Dalian sank as much as 7 percent.
Fitch Solutions noted that Iron ore’s price decline has spilled over to steel. The leading market insights agency also forecast further easing of steel prices for the remainder of 2021 into 2022 as Chinese demand from the construction industry weakens.
Commenting on copper’s fall, Ole Hansen, head of commodity strategy at Saxo Bank, Denmark, asserted that the recent slowdown in Chinese macro numbers, the spreading of covid-19 in China and a firmer dollar are all potential risks and likely to challenge the long-term bullish outlook for the red metal.