​​​​​​​Industrial Metals Run Out Of Steam; Is This Seasonal Or The Start Of Next Slowdown?

Chinese iron ore futures plunged 5%, and copper prices fell to one-month lows on Thursday, as demand for industrial metals weakened before the Chinese New Year.

The selloff in the industrial metals comes as sluggish downstream consumption is expected ahead of the holidays beginning on Feb. 12. 

Iron ore futures contracts on the Dalian Commodity Exchange plunged nearly 5% to 986 yuan ($152.14) per ton. Construction rebar on the Shanghai Futures Exchange was down 2%. Comex copper prices tagged one-month lows to $3.51. 

Adding to the downward pressure on industrial metals was a stronger U.S. dollar and weaker global equities following liquidity and volatility concerns in financial markets. 

Bloomberg Industrial Metals Index has hit overhead resistance after a monster run from the lows in March 2020. 

The Mizuho Bank Weekly China Outlook showed Chinese iron production slowed into the new year. 

It remains to be seen if declines in industrial metal prices are a seasonal phenomenon due to the Chinese New Year next month or if this is the beginning of the next global slowdown.