In what news commentators said was the biggest one day drop in commodity trading history, the LME plunged during its opening Tuesday morning. Copper and aluminum took the biggest dives. The spot aluminum price was off $500/ton at $2434 cash. The spot copper price plunged 25% to $6389. The markets remain volatile throughout morning trading.
According to several analysts, base metals have attained “bubble-like properties” and many believe that industrial metals were set for a sharp correction. This may be just the beginning of the sell-off. The drop comes as no surprise as just last week RBC Capital Markets called for a decline in prices for a number of base metals. We have been saying for quite some time that many of the metals were becoming more than frothy. Clearly supply and demand were not creating any kind of market equilibrium. We will be updating this story throughout the day. Oddly enough, this unprecedented drop came on the first of the month.