The price of copper as a base metal often considered a proxy for global growth dropped 4.2% overnight to deliver its heaviest fall in two years in another warning sign to investors betting that base metal and commodity prices are set to enter a bull market.
In response to the falls in coal, iron ore, and copper prices overnight shares in BHP Billiton Limited (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Whitehaven Coal Ltd (ASX: WHC) are down 2%, 2.7% and 2.3% respectively today.
Although some commodity prices have entered a technical bull market as a result of bouncing more than 20% off recent lows it would be foolish to get carried away over the prospect of a return to boom-time prices delivered by China's construction super-cycle and lower supply.
The weakness of copper in particular could be seen as a warning that all the media chatter of a return to "synchronised global growth" as an elixir for commodity prices may be overblown as China's demand growth is nothing like its heady recent history.
A gently appreciating U.S. dollar over the course of 2018 is also another potential headwind for commodity futures for delivery that are often sold to overseas buyers.
Other miners on the slide today include South32 Ltd (ASX: S32) and Syrah Resources Ltd (ASX: SYR) that are down 4% and 5.2% respectively.
For long-term investors making money in the commodity space remains a challenge and as such it may be worth looking to the blue-chips of tomorrow not yesterday.
