Freeport-McMoRan’s shares are on the cusp of a bear market as the world’s largest copper producer warned about plunging copper prices on concerns coronavirus has severely impacted China’s economy, reported Reuters.
Chief Executive Richard Adkerson said in an interview on Tuesday that the outbreak of coronavirus in China is a “real black swan event” for the global economy.
China is the largest buyer of the industrial metal in the world, and with large swaths of its industrial sector shut down because of the virus and holiday, demand has collapsed, sending prices lower for the past ten sessions, the longest losing streak since 1986.
Copper is regarded by many in the investment community as a bellwether of the global economy. With dozens of Chinese cities locked down and tens of millions of people confined to their homes, the second-largest economy in the world has ground to a halt.
“Chinese demand accounts for about 50% of the majority of base metals and looking at the latest data regarding the coronavirus, it’s now spread quite widely,” said analyst Timothy Wood-Dow at BMO Capital in London.
Back in 2003, the SARS outbreak led to a 10% decline of Goldman Sachs Commodity Price index and fully recovered months later.
Adkerson’s warning of a “black swan” event for the global economy is because China is one of the largest drivers of growth in the world. If, for whatever reason, their industries or consumers go offline, it would create a massive shock that could tilt the global economy into recession.
David Adams
Article URL : https://www.zerohedge.com/markets/freeport-mcmoran-ceo-fears-global-black-swan-dr-copper-suffers-worst-losing-streak-34-years?