Metals cap worst quarter since 2008

Base metals booked the worst quarterly slump since the 2008 global financial crisis as China’s economy recovered only gradually and fears of a world recession intensified.

The London Metal Exchange Index tumbled 25% since the end of March, although the decline has been magnified due to prices spiking that month following Russia’s invasion of Ukraine. Tin has been the worst performer, plummeting 38%, while aluminum dropped by almost a third and copper by 20%. It was the first quarterly decline for the entire index since the start of the pandemic.

“Markets have been buffeted by both growth and inflation worries for some time now and are not getting any relief from G-7 central bankers, most of whom are intent on raising interest rates further,” ED&F Man analyst Edward Meir wrote in his metals report.

A gauge of Chinese factory activity expanded in June for the first time since February, as virus controls were eased. The improvement was fairly muted, however, and a weak property market continues to weigh on metals demand. The Covid Zero policy also remains intact, despite a relaxation of quarantine rules, meaning there’s a constant risk of more restrictions if case numbers pick up again.