• 782 days Will The ECB Continue To Hike Rates?
  • 782 days Forbes: Aramco Remains Largest Company In The Middle East
  • 784 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,184 days Could Crypto Overtake Traditional Investment?
  • 1,189 days Americans Still Quitting Jobs At Record Pace
  • 1,191 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,194 days Is The Dollar Too Strong?
  • 1,194 days Big Tech Disappoints Investors on Earnings Calls
  • 1,195 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,197 days China Is Quietly Trying To Distance Itself From Russia
  • 1,197 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,201 days Crypto Investors Won Big In 2021
  • 1,201 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,202 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,204 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,205 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,208 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,209 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,209 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,211 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

Copper Price Corroborates Manufacturing Slowdown

The price of copper is sometimes referred to as "Everyman's Economist" because it is highly correlated with the behavior of the manufacturing sector, as illustrated in Chart 1.

Chart 1

Today on the London Metal Exchange (LME), the price of 3-month forward copper finished $110 per tonne lower from Tuesday's close. At $6,530 per tonne, this is the lowest close for 3-month copper since April 20, 2006 (see Chart 2). Although today's relatively sharp price drop is in part related to the settlement of a Chilean miners' strike, copper prices have been in a declining trend since early September. This weakening in copper prices corroborates the slowdown in the pace of U.S. manufacturing activity - it appears as though manufacturing output peaked in August 2006 - and the recession in housing. The decline in the dollar price of copper is all the more indicative of faltering goods-producing activity in the U.S. inasmuch it has occurred at the same time that the foreign exchange value of the dollar has been falling. All else the same, the dollar price of an internationally-traded generic commodity would be expected to rise as the foreign-exchange value of the dollar fell. The fact that the dollar price of copper has declined along with the fall in the dollar implies that the price of copper has declined in terms of other currencies, not just the dollar. This could suggest that manufacturing activity globally is slowing.

Chart 2
LME Copper, Grade A: Closing 3-Month Forward Price
$/Metric Tonne

 

Back to homepage

Leave a comment

Leave a comment