LONDON (Reuters) – The London Metal Exchange (LME) base metals markets were a scene of carnage on Wednesday. The LME Index (.LMEX), a basket of the exchange’s six core contracts, slumped by almost four percent in a single day.
The bloodbath is part and parcel of the turmoil playing out across the financial market spectrum. But industrial metals find themselves at the epicenter of investors’ fears about global, particularly Chinese, growth and escalating trade tensions. A rising dollar and a falling yuan simply reinforce the macro negativity.
If Doctor Copper and his metallic friends are to be believed, global manufacturing is heading for a cliff-edge. But should we believe them? Those analysts that track the complex are not convinced.
“There were no metals-specific data or news that could explain the price slump,” according to Commerzbank’s daily commentary. “We regard the price slide as exaggerated, absurd and unjustified.” Is the price rout signal, or noise?
Although copper inevitably grabs the headlines at times such as these, a more interesting perspective on the question is offered by zinc.
REASONS TO BE BEARISH
LME three-month zinc hit an 11-year high of $3,595.50 per tonne in February.