Copper prices were on track for their biggest drop in more than two years Friday, as investors worried about slowing growth in China, the world's biggest consumer of the industrial metal. Copper for May delivery, the most actively traded contract, fell 3.6% to trade at $3.1015 a pound on the Comex division of the New York Mercantile Exchange. It was the lowest price since November and the biggest one-day percentage drop since December 2011 (Source: Wall Street Journal)
Investors have become unnerved by a barrage of negative economic news coming out of China, which accounts for 40% of the world's copper demand. On Friday, a solar-equipment maker became the first Chinese company to default on a bond traded in the mainland, according to Moody's Investors Service.
The default comes amid broader fears about the impact of China's economic slowdown on demand for industrial metals, which are used in everything from smartphones to household plumbing. Activity in China's manufacturing sector fell to a seven-month low in February, HSBC said on Monday.
As I have been arguing for a longtime, Zambia is facing significant risks from the ongoing reduction in copper prices. Copper prices are headed for the longest slump in 20 years, on signs of weakening demand after manufacturing slowed in China. A significant slowdown in copper prices will amplify the current monetary and fiscal challenges facing Zambia.
Chola Mukanga | Economist
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