Copper prices are at an 11-month low, with further heavy falls seen this morning, as fears about the global economy take centre stage.
 
Copper is widely seen as a bellwether for economic growth around the world, given its widespread industrial usage. The declines in the price, which has now broken firmly through its 200-day moving average, are symbolic of worries afflicting investors. The IMF warned this week that global growth would slow significantly, as the US, UK and Europe edged closer to renewed recession, while Chinese manufacturing data released this morning points to yet more of a slowdown in one of the largest consumers of copper. US home construction was revealed this week to have fallen to its lowest level for three months during August, putting further downward pressure on prices.
 
In addition, a supply deficit in copper was shown to be smaller than expected, with the deficit in the first half of 2011 being just 130,000 tonnes instead of the expected 300 to 600 thousand tonnes. Further declines were prevented by strike action in Indonesia, while Chinese copper imports actually surged during August, although they are still down by almost 12% compared to August 2010. With the Fed now refraining from more quantitative easing for the moment, risk appetite is likely to suffer heavily, and copper is likely to suffer along with it.