Global selloff sends copper in a bear market, down 20 percent from highs seen in May

Inventories at copper warehouses tracked by the London Metal Exchange (LME) have more than doubled since May.

Concerns over demand in China and other geographies have triggered a selloff in global copper prices, sending it into a bear market, down 20 percent from the record highs seen in May this year.

Prices have already fallen below the $9,000 per tonne mark for the first time since early April. For the month, copper futures are down as much as 7 percent, now trading near four-month lows, and analysts are not ruling further declines, sending net longs on the London Metal Exchange (LME) down by 60 percent.

Copper is a crucial metal used in wiring and batteries and prices have continued to slip further below as the Chinese economy struggles with growth. Recent data showed China's June quarter GDP growth to have slipped to its lowest in five quarters, igniting concerns over the sustainability of demand.

"A lack of major policy shift in China weighed on sentiment,” Bloomberg quoted an ANZ Group's analyst earlier in July. The recently concluded Plenum by Chinese Communist Party too failed to inspire confidence in any meaningful remedial measure to strengthen demand.

The outcome of China's Third Plenum, a much-tracked conclave of Chinese Communist Party officials has not taken any major step to arrest a long-running property slump.

As the demand weakens, the inventories are back on rise, of late. In LME as well as in Shanghai, inventories at copper warehouses tracked by the London Metal Exchange (LME) have more than doubled since May.

However, analysts are hopeful of higher prices in 6-12 months, and as demand rebounds in 2025, higher levels could again be tested.