A new round of trade war tensions has sent metal markets into a tailspin.
The price of copper yesterday crashed through US$6,000 per tonne for the first time in a year and is headed for its biggest monthly drop since 2015.
Zinc, lead, nickel and platinum prices tumbled more than 2 percent and gold prices slid to a one-year low.
Metals are accelerating a sell-off that started early last month over fears that the trade fight between China and the US would dent economic growth, stunting demand for raw materials.
China yesterday accused US officials of making false accusations and fired back against a claim that Chinese President Xi Jinping (習近平) is blocking talks with the US.
“Uncertainty dominates at this stage and investors are still very wary with all the trade protectionism and threats of retaliation we’re seeing,” ABN AMRO Bank NV senior sector economist Casper Burgering said by telephone from Amsterdam. “You can clearly see that reflected in copper prices today.”
Metal prices plunged just after 8am in London, leading brokers to speculate that the move was driven by technical funds, also known as commodity trading advisers (CTA), adding short positions at the start of the European trading day.
“Given the timing of these moves, it would appear a CTA offer has re-emerged,” London-based Marex Spectron analyst Alastair Munro said by e-mail.
This week, speculative short positions in copper have risen to the highest level since a peak in January 2016, he said.
The rising tensions sent the yuan tumbling against the US dollar, putting further pressure on buyers in China, the world’s leading consumer of industrial commodities. The currency is trading near its lowest level in a year.
Copper prices had dropped 2.3 percent to US$6,006.50 per tonne as of 12:12pm on the London Metal Exchange.
Prices have fallen 18 percent since early last month, approaching the definition of a bear market.
Zinc and lead each lost more than 3 percent, while nickel slid 2.2 percent. Aluminum dropped 0.4 percent, as inventories on the London Metal Exchange rose for a ninth day, the longest run of gains since 2009.
All precious metals tumbled in London, led by platinum, which fell as much as 2.5 percent to the lowest since December 2008.
Gold slumped to the lowest in a year as US Federal Reserve Chairman Jerome Powell’s comments on US employment and inflation helped to sustain expectations for another interest rate increase in September.
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