The $3tn rout of Chinese equities has spilled over into commodities, pushing nickel, zinc and iron ore into bear market territory and sending copper to its lowest level since the financial crisis.
With more than half of companies on equity markets now suspended, traders in China are increasingly turning to commodities and industrial metals to raise cash to meet margin calls from share losses. Others are increasing their bearish bets as concerns about slowing economic growth in the world’s biggest commodity consumer intensify.
Market participants have added to their short positions in copper with trading volumes in Shanghai doubling on Wednesday to more than 1m contracts. That helped drive copper down on the London Metal Exchange to its lowest level since 2009, at $5,293 a tonne.