Copper prices had rallied to recent highs in 2017 and early 2018, reflecting optimism over U.S., China, and other nations’ growth prospects for 2018.
An article at Nasdaq.com said in late January 2018,
However, the past few months of tensions over tariffs and “trade wars” have been one factor that may contribute to somewhat lower expectations for global growth going forward. To the degree that copper is a leading global economic indicator, this has already shown up in the recent prices for the metal, which have plunged to a one-year low.
FIGURE 1: JULY FUTURES CONTRACT FOR HIGH-GRADE COPPER
Note: July contract, according to the CME Group, is priced in U.S. cents per pound, with a contract unit of 25,000 pounds.
Source: Nasdaq.com, data as of 7/9/18.
Reuters commented on recent copper prices on Monday (July 9), saying in part,
Given that, according to the CME Group, “copper prices are sensitive to cyclical industries, such as construction and industrial machinery manufacturing,” the metal has earned the nickname “Dr. Copper” from some traders and analysts for its ability to predict changes in economic trends.
It will be interesting to see if the IMF revises global growth projections in its next World Economic Outlook, scheduled for release on July 16, 2018. In June, the IMF posted on its blog, “The world economy continues to show broad-based momentum. Against that positive backdrop, the prospect of a similarly broad-based conflict over trade presents a jarring picture.”
TABLE 1: IMF WORLD ECONOMIC OUTLOOK GDP PROJECTIONS (APRIL 2018)
Source: International Monetary Fund, April 2018
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