Copper temporarily below USD 9,000, iron ore faces big weekly loss

by David Fleschen

Yesterday, the copper price temporarily fell below the USD 9,000 per tonne mark for the first time since last October. It is facing its sixth weekly loss in a row. Among market participants, demand concerns or economic concerns in general continue to dominate. In our opinion, there are fears that the economy is sliding into recession - there is no other explanation for the strong price declines of the last few weeks. In addition, the very firm US dollar (see precious metals above) has weighed. The weakness has not been limited to copper, but has extended to the entire industrial metals sector. Zinc, for example, fell to a 4-month low, lead even traded at its lowest level since the end of September.

Tin was down by double digits at times, but had recovered about half of its losses by the end of trading. Iron ore also lost massively recently: it is heading for the biggest weekly loss since mid-February. Here, the economic worries and especially the concerns about China (in addition to the lockdowns, default of a major real estate developer; see yesterday's Daily Commodities Info) are obviously having an even greater impact. This is because iron ore is mainly used in steel production and the construction industry is a big consumer of steel. Not only in China is steel demand threatening to fall, but also in Europe: the association of European steel producers, Eurofer, last week revised its forecast for European steel demand this year downwards. The previously expected increase of a good 3% has become a forecast decline of almost 2%. Eurofer attributes this to the sharp rise in energy prices, ongoing supply chain problems and the Ukraine war. Next year, steel demand is expected to recover by 5%, although according to Eurofer this forecast is fraught with great uncertainty and depends heavily on the development or impact of the Ukraine war.

Source: Commerzbank Research, Photo: Fotolia

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