Copper price continued slumping as concerns about the global economy continued. Data by TradingView shows that copper plunged to a low of $3.63, the lowest level since November 2022. It has now retreated by more than 16% from its highest level this year.

Analysts cite three main reasons for this decline. First, there are worries that the global economy is not doing well. As I wrote here, data from China showed that the country’s industrial production dropped in April. Retail sales have also declined while youth unemployment rate jumped. Economic data from China are important for copper prices since the country is the biggest consumer of the metal.

Meanwhile, there are concerns about the American economy as the banking crisis escalates. In a statement on Friday, Jerome Powell warned that the fallout of the banking sector means that there will be a liqudity challenge in the country. Further, there are concerns about the American commercial real estate sector. Copper is often seen as a barometer of the global economy.

Meanwhile, inventories at the London Metal Exchange (LME) have more than doubled recently. Stockpiles have risen in the past 21 days, the longest streak since 2013. Higher inventories mean that there are more supplies. 

There are other challenges in the copper market. Data in the LME shows that the cash to three-month spread at the LME moved into a contago. This means that the spot copper price is $60 cheaper than in the futures market. This is the first time in 30 years that the spread has jumped.