Friday, November 13, 2015



Copper just tanked to a new six-year low, 
and that may be a telling sign about the state of the global economy, specifically China. Strong demand usually points to an economy that is firing on all cylinders, which seems to be the opposite of what copper is telling us now. Copper has sunk by about 22% so far this year, and it doesn't look as if that slump is abating.

How about a metric ton of zinc? Try just under $1,600, the least since that same time … and down more than 26% year-to-date. Aluminum? Nickel? They're plunging, too.

Just take a look at this chart of the London Metal Exchange Index. It tracks the performance of six base metals. You can see that it has weakened significantly since mid-2014 and is rapidly slumping toward the 2009 recession lows.


Think about what this says for the real world. It suggests we face very serious growth problems, despite years of easy money and artificial puffery in assets.

On Thursday morning in New York, copper was down about 1.5%, near $2.183 a pound, the lowest level since 2009.

Copper is a key commodity because it is used in a whole lot of stuff that's manufactured, from cars to bathroom sinks.

And so, weaker demand for copper is sometimes seen as a symptom of underlying weakness in the world's biggest economies, particularly China.

Copper's decline is part of the broad sell-off in commodities we've seen this year that's also taken iron ore and crude oil to multi-year lows.

In their latest global economic outlook, Barclays economists wrote Thursday that the current cycle of low commodity prices would likely continue for longer.

The prospect of the type of v-shaped rebound that has characterized recent recoveries looks slim. 

fut_chart (6)

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