Copper nosedives to its 20-month low; expected to tumble even more

Amid recession fears and a weak Chinese market, Copper has nosedived to its lowest level in the last twenty months. The important red-metal element, used in almost everything from automobiles to smartphones to wires to home appliances has dropped below $7,000 a tonne for the first time since November 2020.

The precarious tumble of the metal is evident from its stock market performance as well. At the London Metal Exchange, the metal is already down 25 per cent. Reportedly, the metal is expected to rival the decline it suffered at the peak of 'The Great Recession' of 2008.

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The red metal and its production, as well as supply, have been obstructed due to the slowdown in the Chinese economy, which on Friday grew at a pace of 0.4 per cent in the first quarter of the year.

China, the world's largest metal consumeris struggling

It is pertinent to note that China is the largest metal consumer in the world. Owing to Xi Jinping's 'Zero-Covid tolerance' scheme where entire cities have been closed due to a small number of cases, China's economy has been drastically hit. This means the use of Copper has reduced significantly.

Read More:China's economic growth drops to 0.4 per cent amid draconian lockdown measures and severe heatwave

Pair it up with surging energy costs weighing heavy on Europe and the US facing its worst-ever bout of inflation and the situation becomes worrisome.

Copper making deep drops in the market is not a recent phenomenon either. When the pandemic hit the globe in 2020, the precious metal slipped nearly 19.8 per cent in Q1.

Goldman Sachs has only added to the gloom by remarking that the metal is expected to slip below the $6,700 mark in the coming three months as China continues to remain sluggish in its economic recovery.

(With inputs from agencies)