[LONDON] Copper and other base metals were hit by heavy selling on Wednesday and the oil price slump continued after the World Bank lowered its global growth forecast due to disappointing economic prospects in Europe and Asia.
Benchmark copper futures, often seen as a barometer of industrial health, crashed over 6 per cent to below US$5,500 a tonne - levels last seen in 2009.
The selling spilled into other metals, with lead hitting 30-month lows, while zinc and aluminium tumbled to nine- and eight-month lows respectively.
Oil prices also remained under pressure, with Brent benchmark crude dipping to an intraday low of US$45.59 a barrel, down nearly 60 per cent since last June.
In coal markets, European prompt contracts have fallen around 25 per cent in the last eight weeks to US$57.70 a tonne, as oversupply adds to the impact of slowing demand.
The World Bank has cut its 2015 global growth forecast to 3 per cent from 3.4 per cent, and its 2016 forecast to 3.3 per cent from 3.5 per cent.
It cited disappointing economic prospects in the eurozone, Asia and some major emerging economies, offsetting the benefit of lower oil prices.
While the sharp decline in commodity prices is good news for households and industry, as energy and raw material costs will fall, it puts deflationary pressure on many economies.
In the energy sector, oil prices have been falling due to an abundance of supply. Soaring North American shale oil production has created a glut in the Atlantic basin with barrels struggling to find buyers, but Opec producers have decided not to cut output to balance the market.
In copper, however, analysts have pared back forecasts for a global copper surplus - the first in five years - after a series of production forecast downgrades, which could attract some buying from bargain hunters.
"It seems to be overshooting," Benjamin Louvet, manager of the Prim Commodities fund, said.
He noted that copper was being hit particularly hard because it is one of the commodities that is most sensitive to economic growth.
"If the price manages to go up about 1-2 per cent this afternoon then it could stop the bleeding," he added. "But if it falls sharply two days in a row then we will see some margin calls, and hedge funds will have to reduce their leverage and sell some of their positions."
Coal, the most used fuel in electricity generation, has seen supply rise over the past five years while demand in the core markets of Europe, the United States and China has slowed partly because of increased use of alternatives such as renewables or natural gas.