Metal price slump as bad as 'great depression'

8 December 2008
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08 December 2008 | Jake Kanter

The fall in metal prices has matched the rate of decline last seen during the great depression in the 1930s.

A briefing by Barclays Capital, the investment arm of Barclays Bank, revealed that base metals such as copper, lead and zinc have experienced their sharpest price falls in the past 77 years.

Prices have fallen an average of 60 per cent compared with figures from 2007. Today the London Metal Exchange price for copper stood at $3,360 (£2,286) per tonne, compared to more than $8,800 (£5,989) at its peak in May 2006.

The prices of zinc and lead have also fallen dramatically. Lead is now trading at $995 (£679) per tonne, compared to its peak of over $4,000 (£2,726) in 2007. Zinc has fallen from a peak of more than $4,500 (£3,068) per tonne at the end of 2006 to $1,135 (£774) today.

Gayle Berry, vice-president of commodities research at Barclays Capital, told the demand for metal is closely linked to the health of the economy. "We are expecting a recession and for that reason industrial metals are particularly bearish. The speed of the price fall has been unprecedented."

She expects to see a further collapse in prices and believed buyers would welcome the news. But argued there is still a lot of caution in the market: "Volatility is more difficult to deal with. We have seen a notable increase in consumers trading in the futures market."


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