Investing.com - Copper prices tumbled to lowest level since May 2009 on Thursday, as investors focused on the deteriorating outlook for China and its impact on the global economy.
Market sentiment was hit after trading on China’s stock markets was suspended for the second time this week on Thursday, as a plunge of more than 7% after the open triggered circuit breakers.
Traders are concerned that the plunge in the stock market could spread to other parts of the Chinese economy, triggering fears that the Asian nation's demand for the industrial metal will decline.
Adding to risk aversion, the People's Bank of China set its official yuan midpoint rate lower compared with Wednesday's fix. It was the largest daily drop in the midpoint rate since last August, when an unexpected almost 2% devaluation of the currency sparked a broad based selloff in markets.
Some market players see the tactic as an attempt by China to shore up growth, while others are concerned over a currency war that could destabilize the global economy.
Copper for March delivery on the Comex division of the New York Mercantile Exchange sank 7.4 cents, or 3.56%, to trade at $2.014 a pound as of 15:05 GMT, or 10:05AM ET. It earlier fell to $1.999, a level not seen in more than six years. On Wednesday, copper shed 0.7 cents, or 0.36%, following the release of disappointing Chinese service sector data.
Copper is down 5% so far this week as a meltdown on China’s stock market and a rapid depreciation of the yuan rattled investor sentiment.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.
Elsewhere in metals trading, gold futures rallied to a nine-week high on Thursday, as market players sought refuge amid steep declines in global stock markets.
The yellow metal is up 4% so far this week on safe-haven demand amid a global stock market rout, worries over the Chinese economy and heightened geopolitical tensions.