Last quarter was the worst for metals since 2008

1 Jul 2022 , 10:00 AM

London Metal Exchange Index has fallen 25% since the end of March.

Base metals experienced their greatest quarterly decline since the global financial crisis of 2008 as worries about a worldwide recession increased and China’s economy very slowly recovered.

Although the decrease has been accentuated by price spikes that month as a result of Russia’s invasion of Ukraine, the London Metal Exchange Index has fallen 25% since the end of March. Tin has fared the worst, falling 38%, followed by a 31% decline in aluminum and a 20% decline in copper. Since the beginning of the epidemic, it was the entire index’s first quarterly decrease.

As virus controls were relaxed, an indicator of factory activity in China increased in June for the first time since February. Although there was some recovery, the demand for metals is still being negatively impacted by a sluggish real estate market. Despite a reduction of quarantine regulations, the Covid Zero policy is still in place, thus there is a persistent potential of more limitations if case numbers increase once more.

The market is still threatened by the impending possibility of a recession in the US and possibly elsewhere in the world. At the annual meeting of the European Central Bank in Portugal, Federal Reserve Chair Jerome Powell and other central bankers cautioned that the globe is transitioning to a regime of greater inflation. As a result, US equity markets opened lower. Major economies are at the very least on the verge of a slowdown that will reduce construction activity. The economy may be in worse shape than previously anticipated, according to new US consumer expenditure data, which also point to further high inflation and interest rate increases.

In London, copper fell 1.7% on Thursday. Zinc, nickel, and aluminum all had losses of 1%, 4%, and 6%, respectively. The price of gold for August delivery decreased 0.6% to $1,807.30 in New York. The price of gold fell by 7.5% in the second quarter.