Africa: Trade War Pulls Lead Indicators of Copper and Iron Ore Down

analysis

The prices of iron ore and copper are good barometers for the state of the global economy. Escalating trade tensions between the US and China have sent their prices south. This has implications for companies such as Anglo American and producing countries such as Zambia. More crucially, they could be a sign of trouble ahead for the global economy.

You can probably blame US President Donald Trump for this one. Copper prices this week hit two-year lows, while iron ore has reversed a recent bull run. The latest trigger, of course, was Trump's slapping of 10% tariffs on $300-billion worth of Chinese goods.

This trade war has far-reaching implications for Chinese economic growth, and, more widely, global growth. Copper and iron ore are key ingredients for building stuff. When they are in demand, lots of things are being built or manufactured. When they are not, a lot less stuff is made or produced.

Let's start with copper. On Wednesday 7 August, Glencore announced the closure of its Mutanda copper/cobalt mine in DRC in the face of depressed prices.

"These days, the copper market is fully focused on the trade tension and the related fears of slowing global growth," Carsten Menke,...

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