Investing.com - Copper prices tumbled to six-week lows on Thursday, as steep declines on Chinese stock markets and a further depreciation of the yuan dampened appetite for the red metal.
Copper for March delivery on the Comex division of the New York Mercantile Exchange plunged 6.0 cents, or 2.86%, to trade at $2.028 a pound as of 07:50 GMT, or 2:50AM ET. It earlier fell to $2.027, the lowest since November 24. On Wednesday, copper shed 0.7 cents, or 0.36%, following the release of disappointing Chinese service sector data.
Trading on the Shanghai Stock Exchange was halted Thursday about 30 minutes after opening when the benchmark Shanghai Composite fell 7.21% triggering the circuit-breaker system for the second time this week.
Trading was suspended for 15 minutes when the CSI 300 fell more than 5%. When trading resumed the index extended losses to more than 7% and trading was shut for the day.
Market players are concerned that the plunge in the stock market could spread to other parts of the Chinese economy, triggering fears that the Asian nation's demand for the industrial metal will decline.
Meanwhile, the People's Bank of China set the yuan's official midpoint rate at its lowest level since March 2011, amid persistent worries over an economic slowdown and capital outflows.
The tightly managed onshore yuan fell 0.5% to a five-year low of 6.5912 (USD/CNY), the biggest daily drop since last August, when China devalued its currency by 2%.
Some market players see the tactic as an attempt by China to shore up growth, while others are concerned over a currency war that could destabilize the global economy.
Copper is down 4.5% so far this week as investors focused on the deteriorating outlook for China and its impact on the global economy.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.
Elsewhere in metals trading, gold futures rallied to a nine-week high as market players sought refuge amid steep declines in global stock markets.
The yellow metal is up 3.5% so far this week on safe-haven demand amid a global stock market rout, worries over the Chinese economy and heightened geopolitical tensions.