Copper prices tumble on softening Chinese demand, miners fall

South32 Ltd (ASX:S32) and Syrah Resources Ltd (ASX:SYR) both fell sharply today.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The price of copper as a base metal often considered a proxy for global growth dropped 4.2% overnight to deliver its heaviest fall in two years in another warning sign to investors betting that base metal and commodity prices are set to enter a bull market.

In response to the falls in coal, iron ore, and copper prices overnight shares in BHP Billiton Limited (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Whitehaven Coal Ltd (ASX: WHC) are down 2%, 2.7% and 2.3% respectively today.

Although some commodity prices have entered a technical bull market as a result of bouncing more than 20% off recent lows it would be foolish to get carried away over the prospect of a return to boom-time prices delivered by China's construction super-cycle and lower supply.

The weakness of copper in particular could be seen as a warning that all the media chatter of a return to "synchronised global growth" as an elixir for commodity prices may be overblown as China's demand growth is nothing like its heady recent history.

A gently appreciating U.S. dollar over the course of 2018 is also another potential headwind for commodity futures for delivery that are often sold to overseas buyers.

Other miners on the slide today include South32 Ltd (ASX: S32) and Syrah Resources Ltd (ASX: SYR) that are down 4% and 5.2% respectively.

For long-term investors making money in the commodity space remains a challenge and as such it may be worth looking to the blue-chips of tomorrow not yesterday.

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. You can find Tom on Twitter @tommyr345 The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »