Copper has suffered its worst weekly plunge in price since the early months of the coronavirus pandemic, in a stark indicator of the worsening state of the global economy.
The metal dropped below $7,000 (£5,913) a tonne for the first time since November 2020, as fears over a worldwide recession grew.
Three-month copper on the London Metal Exchange is down 2.8% at $6,968 a tonne and the Bloomberg Industrial metals index has slumped to a 17-month low amid concerns that rampant inflation will curb spending by large manufacturers.
The commodity is known as “Dr Copper” because it is a good indicator for the health of the global economy as it is used as a raw material in a variety of products.
Its price has fallen about 35% in the last four months, wiping out gains made at the start of the war in Ukraine. Traders had anticipated the conflict might cause supply shortages. However, recession fears have since gripped financial markets, hitting demand.
Rio Tinto, one of the world’s largest miners, warned on Friday that the global economic outlook was weakening because of the Russia-Ukraine war, tighter monetary policy to curb rising inflation and Covid-19 restrictions in China.
The Anglo-Australian miner said demand in China, its biggest market, had “troughed” in May. On Friday, official data showed that China’s economic growth had slowed sharply in the second quarter.
In a bleak production update, Rio Tinto said: “Prices for our commodities decreased in the quarter, amid growing recession fears and a decline in consumer confidence.
“Trade disruptions, food protectionism and the global focus on securing energy supplies continue to put pressure on supply chains, which will need to be significantly eased before inflationary pressures subside.”
The company also warned on “weakening consumer sentiment” in Europe and the “potential shortfall in energy”.
Oil prices hit $95 a barrel for the first time since the invasion of Ukraine amid weakening sentiment on Thursday. However, they ticked up closer to $100 a barrel after reports that Joe Biden was unlikely to secure any increase in oil output from Opec nations during his trip to the Middle East.
Soni Kumari, an analyst at ANZ bank, said: “Things are looking uncertain in China, which was the only stabilising factor for industrial commodities amid growing recession risk in the US and Europe.”