Mar 15, 2022 - World

China lockdown whipsaws commodities

Data: FactSet; Chart: Axios Visuals.
Data: FactSet; Chart: Axios Visuals.

After massive commodity producer Russia was exiled from the world economy, a new shock is emerging from China — the world's biggest user of raw materials.

The big picture: Commodities prices turned tail and tumbled yesterday, as China imposed new COVID-related lockdowns in response to soaring infection rates.

By the numbers: U.S. benchmark crude oil dropped 5.8% to $103 a barrel.

  • Benchmark Chinese iron ore contracts dropped nearly 7%.
  • Prices for copper, a key industrial metal, fell 2.4%.
  • Even European natural gas prices — the epicenter of the Russian commodity shock — dove nearly 10%.

Threat level: If sustained, the downturn in commodities prices suggests traders see the remarkable level of global uncertainty right now — War! Inflation! COVID! R.I.P. globalization! — as potentially triggering an economic downturn.

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