LONDON – Copper’s there. So too are aluminum and nickel. Tin was there last month. And as for iron ore, well, it’s already gone there and beyond.
As industrial metal prices sink ever lower, the historical reference point becomes ever starker.
Most of the major metals traded on the London Metal Exchange are now trading at levels not seen since the Global Financial Crisis (GFC) of 2008-2009.
The two exceptions are lead and zinc, which are “only” trading around five- and two-year lows respectively.
But are things really that bad? Leaving aside Greece, banks are not failing, credit is not evaporating and industrial production is not imploding.
Global manufacturing activity is at best moderate, at worst mediocre, but certainly not critical. History is not repeating itself, but it may be rhyming, since metals are being hit by another toxic bear cocktail of negative fundamental and financial drivers.
But they are different this time around.
Indeed, the current slow-motion collapse in metals, and many other commodities, might best be understood as the great unwind of the last crisis.
ALL ABOUT CHINA?
This time around concerns about demand are all about China.
It’s easy to forget that it was China that single-handedly helped drag metals off the floor in early 2009.
While Western central banks were fighting the fires raging across the financial system, China’s response to global crisis was to unleash an unprecedented program of infrastructure spending.
New roads. New airports. New railways. New homes. And new power lines to connect everything.
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