Global copper market hit by China's slowdown

Subject

Copper market.

Significance

Copper prices dropped by 11.7% in January due to aggressive shorting by Chinese hedge funds. In the following four months, the metal staged a recovery, only to lose 19% since mid-May, hitting a six-year low on August 26. Physical activity during the traditionally strong second quarter proved disappointing, with demand hit by China's economic slowdown and its declining copper demand. The production cuts recently announced by Glencore have given some relief to the market.

Impacts

• Molybdenum (a by-product from copper mines) prices fell by 15% in the second quarter, pressuring producers' margins further.
• Botswana will defer for one year the payment of a royalty tax, aiming at job preservation and miners' support.
• Vedanta's Zambian smelter's imports of copper feed from Chile will link the two copper centres for the first time.