Red metal, thermometer of the global economy, has lost 30 % of its value since March.
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Copper has lost a little of its radiance. On the London Metal Exchange (LME), its course even passed below the 7,000 dollars (6,937 euros) per tonne in session, Friday July 15. A level he had not reached since November 2020. To be compared to his highest historic, won on March 7, when the ton of red metal was negotiated, in the middle of euphoria, at 10,730 dollars. Or a dropout of almost 30 % from this record.
A real cold stroke that does not only touch copper. All other industrial metals, more or less, are affected. From aluminum to zinc, including nickel, the general trend is down. Since the start of the year, zinc has unscrewed by 18 %, aluminum, 16 %, and nickel, 7 %.
But the fate of copper, acclaimed by a number of industries, is particularly scrutinized by observers, by its status as the thermometer of the economy. When Russian troops invaded Ukraine in late February, investors, losing their compass, shivered by evoking any supply tensions. A surge of fever which intervened in markets already heated by the economic recovery, after the two years of crisis linked to the COVID-19. Result, the courses flambé.
inflation, Chinese slowdown, increase in the dollar
Since April, the wind seems to have turned. While China always applies its zero covid strategy, the health subject has returned to the fore. Even become more sporadic, the confinement measures taken by the Beijing government are worrying. These restrictions, which have affected large metropolises like Shenzhen or Beijing, but especially Shanghai, can only slow down the Chinese economic engine and, therefore, by extension, global activity. The data published by the National Statistics Bureau on Friday prove it. In the second quarter, growth, over one year, of China was limited to 0.4 %. A brutal brake, after a dynamic first trimester, at + 4.8 %.
The fear of lacking metal, the general feeling has moved to the concern of seeing the demand to erode. It is true that the Middle Empire, the first consumer of red metal, uses almost 60 % of global volumes. The copper supply has thus exceeded the demand of around 95,000 tonnes for the first four months of 2022, according to the latest report of the International Copper Study Group.
In parallel, investors wonder about future health reports in Europe and the United States. Inflation fever has started. Anxious to limit overheating, central banks have given a monetary screw. The US dollar appreciated to the point of slipping towards parity with the euro. A firming of the greenback which also feeds the lowering current of raw materials. Finally, the old continent is confronted with an outbreak of energy prices and a risk of shortage in winter 2022-2023, if the Russian gas flows are interrupted.
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