Copper tumbled to the lowest in nearly eleven months, offering fresh evidence that soaring borrowing costs and slower spending are beginning to bite in all corners of the industrial economy.

Prices for the metal — viewed as a bellwether for the global economy — slumped as much as 1.2% to $7 856 a ton on the London Metal Exchange, briefly crashing through the bottom of a tight trading range that has held through much of this year before rebounding partially.

Until recently, mounting worries about weak global manufacturing activity have been partially offset by threats to supply. But prices have been grinding lower in recent months as a rebound in inventories signals that production is now starting to shoot ahead of demand.

LME-tracked stockpiles of the metal — needed both for the energy transition as well as mainstay, old-economy needs — jumped to the highest since October 2021 last week. The copper market has also moved into a wide contango, a condition where spot prices trade at discounts to futures, typically because consumption is weak.

At a macroeconomic level, the pressure on copper has intensified as soaring interest rates and persistent anxiety about Federal Reserve policy spur a rally in the dollar, which makes raw materials more expensive for buyers in other currencies.

US Treasury yields rose to multi-year highs last week, and the latest crop of earnings reports show that borrowing costs are wreaking havoc globally.

TEMPERING EXPECTATIONS
Tesla — a de facto barometer for copper use in an EV sector that’s been white-hot up to now — is dialing back growth expectations as years of rapid expansion collide with rising interest rates and a more cost-conscious consumer. Shares in solar manufacturers also plunged last week after US-based SolarEdge Technologies Inc. warned of canceled and delayed orders.

And in China’s heavily indebted property market, Evergrande Group lurched closer to an October 30 court hearing of a petition to wind up the firm, which may lay bare the once-unthinkable possibility of liquidating its assets. At Country Garden Holdings Co., creditors are preparing for potential debt restructuring after the distressed Chinese developer missed a dollar bond interest payment.

Copper prices traded down 0.4% at $7 914 a ton as of 9:26 a.m. local time on the LME, taking its year-to-date loss to 5.5%