Falling copper prices increase concerns over recession

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By Anna J. Park

Concerns over a global recession are growing as the international copper price logged a steep fall of 12.8 percent in June. The price of copper on the London Metal Exchange (LME) ended at $8,240 per metric ton on the last day of June, down 12.8 percent from $9,450 earlier in the month. The price of the metal is at its lowest level since February 2021, renewing a 17-month low.

The slump in the price of copper is taken more seriously than other metal prices' plunges, because the metal's fluctuating price tends to predict turning points in the global economy.

Often called “Dr. Copper” by the market for its predictability in global economic forecasts, copper's widespread usage in most sectors, ranging from construction to home appliances, has made its price a reliable leading indicator of the global economy. In general, the fall of the price of copper is regarded as indicating a slowdown in the global economy, while an increase in the price of the metal is seen as a sign of economic revival.

Copper is not the only metal that's been witnessing a price fall lately. The prices of other industrial metals, such as aluminum, zinc and tin, all fell in the past month amid the gloomy outlook over the global recession.

Although some experts say the decrease in the prices of the raw materials reflected eased inflationary pressure, many other experts say it's more about the prevalence of pessimistic economic outlooks on the markets. They say that the U.S. Federal Reserve's giant step of raising the benchmark interest rate by 0.75 percentage point earlier in the previous month, as well as China's extended lockdowns, have created downward pressure on the metal prices.

“The price of copper, which is sensitive to the economic situation, has been particularly poor lately,” Kim Yoon-sang, a metal analyst at HI Investment & Securities, said. “The price of the red metal is expected to continue its downward movement until the end of this year, despite possible increases during the second half of the year,” he added.