1 Commodity Bulls Are Running From (Hint: It's Not Oil)
Falling crude prices have caused market volatility over the past few months as investors worry about how the commodity’s slide will impact the global economy in the long run. However, many economists say it isn’t oil traders should be worried about: It's copper.
Copper prices plunged on Wednesday, falling to $2.5055 per pound. The fall was the commodity’s largest one-day drop in three years and sparked worries about the health of the global economy.
Prices rebounded marginally on Thursday, but the question remained: Was Wednesday’s dip a sign of things to come?
Markets closely follow the price of copper as it is used in several industries, and therefore provides some insight into the health of the economy.
On Wednesday, lackluster retail sales data from the US, and the World Bank’s decision to trim its 2015 global growth forecast all contributed to the commodity’s fall.
While prices made a modest comeback on Thursday morning, some analysts believe copper has further to fall before hitting the bottom.
According to Bloomberg, mining companies spurred on by historically high prices are expected to produce an additional 1.6 million metric tons of copper in 2015, something that could further weigh on prices.
Despite that, others are optimistic that demand will recover through the second quarter.
The end of China’s Lunar New Year on February 19 should help increase the nation’s appetite for the commodity as well. Some analysts are even predicting a supply deficit in 2016, suggesting copper’s roller coaster ride is near its end.
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