Copper-Cathode-Electrolytic-Grade-A

The price of copper dropped almost 2% on Tuesday and is close to its lowest level in six and a half years.The metal fell to $4,955 a tonne, just $100 above the level it reached in 2009 in the wake of the financial crisis.

Demand for copper, which is used across industry from construction to car manufacturing, has suffered from the slowing Chinese economy.Investment bank Goldman Sachs warned investors this week that prices would continue to fall.

In a note entitled, “Copper’s bear cycle still has years to run”, its analysts predicted copper prices would probably drop to $4,800 a tonne by the end of December and to $4,500 by the end of next year.The decline in copper is only a part of a global meltdown in commodity prices caused by China’s economic downturn.

The depth of the slump was emphasised on Monday when shares in commodities trader and miner Glencore dived 30%.Four years after the group went public in the UK’s biggest stockmarket flotation, analysts at Investec warned that weak commodity prices could lead to the firm’s equity value being “eliminated”.

Crude oil has fallen some 60% from June last year, thermal coal has been on a long 60% slide since 2011, and iron ore is down even more, close to 70% since 2010.

Any economy dependent on commodity exports is seeing its currency punished.

Chile, where copper makes up 30% of the value of its exports, is expected to announce on Tuesday that public spending, having grown almost 10% last year, will rise by half that amount this year.Economic growth there has slowed along with the fall in the copper price and a decline in investment in the mining sector.

For smaller countries the effect can be catastrophic.On Monday, Zambia’s currency, the kwacha, fell more than 17% – its biggest one-day fall on record – as prices for its copper exports dived again. Copper accounts for 85% of the country’s exports.The currency recovered on Tuesday but it is down 45% on the year.It has also been hit by the news that Glencore, the country’s second largest employer after the government, might make further cuts at its Mopani Copper Mines there. Last week, it announced it would lay off more than 3,800 workers.
Ratings agency Moody’s cut Zambia’s sovereign rating on Friday, making it more expensive to borrow in the international markets.

Source:BBC

[Read 28 times, 1 reads today]
Loading...

11 COMMENTS

  1. A 6 and a half year low you say? Ok, so to all those blaming copper for the depreciation of the Kwacha how is it that 6 and a half years ago with the same copper prices that there are today the Kwacha was trading at 5,000…thats right. We have problems in this country and denial is not going to change that. Too much externalisation of forex by contractors, we will remain with nice roads and eurobond debt when all is said an done tukalalya imisebo.

    0

    0
  2. This is where a sensible government would take the Windfall Tax profits, and buy up shares of Glencore, Anglo-American Corporation, etc.

    0

    0
  3. This is what u get for putting all your eggs in a single basket.Why not cut the over dependence on copper and diversify the economy ?

    0

    0
  4. These corrupt PF with tins full of feaces for heads went on a spending spree on projects that will bear fruits maybe 10 yrs from now, like the good times will last forever
    The only reason this was done is because it is easier and safer to steal by way of over inflated prices. It is borrowed money being used, the natives will only realise how they were over charged later on.

    0

    0
  5. Lets talk solutions. And the solution is: – Value addition. The sooner we realise that exporting raw materials (Copper, maize grain, Honey etc..) without making finished products, or without processing and packaging ready for retail, is the problem, the better.
    The problem is not low copper prices, it is not China either. The problem is lack of value addition. Period.

    0

    0
    • Value addition needs money for investment. The best way to have done this was collect the Windfall Tax, or renationalize the mines like under ZCCM.

      It would be possible to use local resources (copper, timber, cobalt, etc.) as collateral to issue local currencies. This would avoid the problem of inflation and manipulation from the IMF/WB/government. It would also stimulate local economic activity. The libertarians are always going on about turning their national currency back to the Gold Standard. How about sub-national government doing the same? You could have a Provincial, District or regional currency that is free of inflation. Check out: BerkShares.

      0

      0
  6. A sensible person or household would now cut down on expenditure but the lazy bum Edgar is doing completely the opposite!!

    0

    0
  7. Blame it on Lungu……

    Wow! so many intelligent bloggers in the diaspora hiding behind their keyboards…cowards

    2016 vote PF(Edgar)

    i thank you

    0

    0

Comments are closed.