Deepening concerns about economic challenges in the globe's top consumer dragged down copper futures on Wednesday as the base metal slumped to its lowest value in nearly four years, according to Bloomberg.
Exports from China, also the host of the globe's second-largest economy, fell more than 18 percent last month as compared to February 2013. Released earlier this week, that data has tugged down the reddish metal all week long.
Industrial production in the Asian nation also fell last month. Copper is used in manufacturing, construction and additional industry, thus it is sensitive to domestic and worldwide economic news and developments.
"The markets were spooked by the export data, and if retail sales and industrial production come in iffy, it won't look good," trader Rob Montefusco with Sucden Financial Ltd. in London told Bloomberg on Wednesday.
At 9:38 a.m. on Wednesday, copper futures fell 0.37 percent, a 0.011-cent drop to $2.941 per pound.
China is slated to release additional economic data on Thursday, which many analysts, investors and economists are likely to scrutinize given the nation's recent struggles.
Reuters reports the tough times in China are spilling into other national economies.
Global stocks dropped for a fourth consecutive day while U.S. stock futures were driving toward a poor performance. Government bonds issued by Germany, the strongest economy in the euro zone, were under increased demand as concerns about China's slowdown were augmented by the Ukraine-Russia debacle in the Crimea.
"Markets are watching what is happening in copper with awe and trepidation," head of currency strategy Kit Juckes with Societe Generale told the news source on Wednesday. "It's partly ongoing concern about Chinese growth (or lack thereof) and nagging worries about the Ukraine. And partly it is just that the commodity bubble burst last year and not everyone noticed."
The base metal's drop has been precipitous for the past three trading sessions but the economic concerns have begun impacting additional markets. Monetary units closely associated with commodities – like the Australian dollar, the Chilean peso and the South African rand – all have endured rough trading sessions on Wednesday.
Though copper has demonstrated itself to be the worst performing on the commodity complex' metals by slumping nearly 10 percent thus far this year, two investment houses are confident that course soon will reverse.
MarketWatch reports analysts with Barclays distributed a note on Tuesday stating an increased amount of buyers are purchasing while the metal is lower in price. That, the analysts state, is "an indication of interest at lower prices," according to the news source.
Part of that slowdown in China might be associated with seasonal occurrences, the analysts state. Markets for all matters involving the Asian nation are down when it celebrates the Lunar New Year, which comes after aggressive trading and commerce in December.
"While a dip was expected, the contrast to last year's highs was great[er] than usual and added to the sense of nervousness," the note states, according to MarketWatch.
The Wall Street Journal reports the reddish metal might have been oversold as there has been minimal consideration for supply and demand, according to Commerzbank analysts.
As stated in a client note from this past Monday, the worldwide market for the base metal tends to be rather constructed, a factor that should be considered when pondering the commodity's recent performance.
"In fundamental terms … the global copper market is fairly tight, meaning there is no long-term justification for low prices," the client note states, according to The Wall Street Journal.
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