Copper price falls below $3.40 as recession fears intensify

Copper prices fall below Monday's lows as fears of a US economic recession intensify. The base metal has broken to the downside from the consolidation formed in a narrow band of $3.41 to $3.44 and is aiming for further depreciation as rising interest rates challenge growth rate forecasts.

A Reuters poll predicts that the Federal Reserve (Fed) will raise interest rates by 75 basis points (bps) in the first week of November. Notably, the Federal Reserve is acting particularly actively to reduce the inflation rate. Consequently, policy-tightening measures have been consistently popular.

This has increased the likelihood of a future recession, as the growth rate has been significantly lowered and unemployment levels are anticipated to rise. Fears of a recession have bolstered US Treasury Chief Janet Yellen's statement that one "cannot rule out the likelihood" of a recession, as reported by MSNBC.

China's copper imports have increased by 25.6% during the past year. Amid the announcements of stimulus measures by the Chinese government to avoid the implications of the zero-tolerance Covid strategy and a real estate crash, infrastructure spending has increased. After the monsoon season in Asia, construction and real estate firms are known to recover throughout the winter months.

According to a report by ANZ Research, copper imports increased significantly as the forecast for demand in the power industry improved.

After the third continuation of XI Jinping's leadership in China, his policy pronouncements will continue to be crucial moving forward.