Dr. Copper's diagnosis for the world economy: It isn't well.
Copper, known in the market as the commodity "with a doctorate in economics" because its price often reflects the health of global manufacturing, ended Friday in a bear market.
The front-month contract, for April delivery, fell 5.30 cents, or 1.7%, to settle at $3.1515 a pound on the Comex division of the New York Mercantile Exchange. The contract is down 21% from a high of $3.9785 hit in February 2012. A drop of 20% or more signifies a retreat into bear-market territory.
"Copper is telling us right now that all is not well with the global economy," said Matt Zeman, head of trading with Chicago brokerage Kingsview Financial. "If people still look at copper as a barometer of economic activity, we're in for some rough times ahead."
Prices have been in decline for much of this year as investors wagered that supplies from new and expanded copper mines would overwhelm demand from manufacturers.
These fears escalated at the start of the week, after China reported slower-than-expected economic growth for the first quarter.
China is the world's top copper consumer, accounting for about 40% of global demand. Its gross domestic product expanded 7.7% in the first quarter, a slowdown from 7.9% in the final quarter of 2012.
Copper lost 5.9% on the week, its biggest weekly percentage decline in 16 months, and is down 13% this year. The metal is a component in many products, ranging from bathroom pipes to iPhones.
Sparking Friday's move was news that copper shipments out of Zambia, Africa's largest copper producer, have resumed after a two-week halt because of a railroad accident.
The additional supplies will arrive in a market in which stockpiles of extra copper are already on the rise. The amount of the metal held in warehouses overseen by the London Metal Exchange rose 2,000 tons, to 614,350 tons, on Thursday, up 92% this year.
Analysts said weak demand and robust supplies could continue to put pressure on copper prices.
Miners are unlikely to delay new projects or shut down production until prices near $2.80 a pound, said Catherine Virga, director of research at CPM Group.
Bets on lower copper prices remain the dominant force in the market. Bets that prices would fall, known as a short position, surpassed wagers that prices would rise on Feb. 26, according to weekly data from the Commodity Futures Trading Commission.
The net short position hit a record 35,951 contracts in the week ended April 2 but has declined slightly since then. By this past Tuesday, the value of the net short position was about $2.3 billion.
Still, with copper trading above its cost of production there are few willing to bet on prices to rise, traders at RBC Capital Markets said in a note.
"It's unwise to stand in front of a train," they said.