Are copper prices predicting a global slowdown?

Prices of copper and other commodities have fallen sharply in the last quarter

Copper price is always being regarded as a great indicator for evaluating the health of an economy as copper is used as a raw material across industries operating within an economy.

Copper is officially in the bear market. Copper prices have fallen more than 20 per cent from its high of USD 10,730 a ton which is set in March. Now, the copper is trading at USD 8,306 a ton on June 30. This drop has been the highest quarterly decline in the prices of copper since 2011 and now it is trading at its 16-month low. 

Other commodities like steel, aluminum, and zinc have also shown a sharp correction in the same period. 

For the same reason, the shares of companies like Tata Steel and Hindalco have fallen sharply in the last month. The shares of Tata Steel and Hindalco have dropped 18.43 per cent and 17.5 per cent, respectively. 

Prices of copper and other commodities are declining due to recession risk in developed economies like the US and Europe. Central banks of these economies have started to raise interest rates aggressively. This can lead to a decline in GDP growth with lower consumer spending and higher funding cost for the businesses operating in these countries. 

India and other emerging economies are also rising interest rates. If the central banks across the world continue rising interest rates aggressively, it may lead to a global slowdown soon.