On Wednesday, copper prices significantly declined to a 16-month low as market participants focused on the persisting risks of an economic downturn.
US futures tied to the metal ticked 3.19% or 0.13 points lower to $3.91 per pound. This downturn marked the lowest level in over a year. Likewise, the London contracts shed 2.92% or 266.00 points to $8,732.00 per tonne after falling to their lowest level since March 2021.
Investors feared that the widespread rapid interest rate hikes would topple the global economy into recession. Copper is an indicator of economic health, and the slowdown jitters significantly capped the movement of the base metal.
They also anticipated the US Federal Reserve to launch another 75 basis point rate hike in July. Correspondingly, this will pave the way for another half-percentage-point rise in September.
Another bearish factor for the metal is the latest upbeat inventory report. The world refined copper market indicated a 3,000.00-tonne surplus in April, compared with a 22,000-tonne deficit in March.
Moreover, the return of the Chinese COVID-woes dented the traders’ sentiment. Top importer Beijing reported 135 new coronavirus cases in the mainland region on June 22. The latest record came in higher than the 126 infections a day earlier.
In Peru, the second-leading copper producer, a group suspended the highway blockade used by MMG Ltd’s Las Bambas mine. The community agreed to negotiate with the government and the company over the road’s use.
Chilean miners strike at copper giant Codelco
Meanwhile, workers at Chilean state-owned mining giant Codelco, the world’s largest copper maker, launched a major strike today.
The protest aims for the closure of a smelter over environmental issues. Nevertheless, the local government downplayed the impact on operations.
Subsequently, the Federation of Copper Workers (FTC) anticipated 50,000 workers to strike, including staff and contractors. This move came after the closure of Ventanas smelter despite calls for investment to keep it open.
