Since May, the metal has lost around 25% of its value, due to the increasing strength of the US dollar and weaning demand in China.
Copper prices extended losses on Tuesday, hitting a fresh six-year low as the terror attacks in Paris added to concerns about the global economy that have caused a month-long selloff.
On Tuesday morning, the red metal dropped to below $4,600 per tonne on the London Metal Exchange for the first time since 2009. This followed on from a significant sell-off on the Shanghai Futures Exchange, which sent the metal down 3.5%.
Copper prices had closed Monday almost 3% lower at $4,690, as investors shied away from commodities perceived as risky in light of the Paris attacks, which left at least 129 people dead.
But the French tragedy is not the only cause of the slump in copper prices. Since May, the metal has lost around 25% of its value, due to the increasing strength of the US dollar and waning demand in China, which is facing an unprecedented decline in refined copper imports that keep pushing prices down.
Chart by Kitco Metals.
Copper is broadly considered a barometer for global economic health, which is heavily influenced by China, the world’s top consumer, accounting for roughly 45% of global copper demand.
Trading house Arc Resources, one of China’s largest buyers, expects shipments to drop another 10% in 2016. Purchases have already dropped almost 4% to 2.55 million metric tons in the first nine months of 2015 from a year earlier, customs data published by Bloomberg shows.
Meanwhile, inventories on the Shanghai Futures Exchange and in bonded customs warehouses in China have risen. According to Shanghai Metals Markets, copper supply is also set to increase as smelters try to meet production targets before the end of the year.
