• Copper has dipped below $7,000 a ton for the first time since September 2020.
  • The commodity is seen as a key economic bellwether and is currently in a bear market.
  • Copper's decline could be a signal that a recession is coming, according to analysts.

Copper has slipped below the $7,000 a ton level for the first time since September 2020.

The commodity, which is a major component in electrical equipment like wiring and motors, fell as low as $6,953 a ton on the London Metal Exchange, as it slipped 1.52% on Friday. 

Copper is seen as a key economic bellwether and has entered a bear market before every recession in the last 20 years. 

It's now fallen 27.4% year-to-date, with Chinese coronavirus lockdowns driving a broad and deep sell-off.

"This shift in the state of metals pricing today will likely persist until sufficient conviction in the efficacy of Chinese stimulus," a team of Goldman Sachs strategists led by Nicholas Snowdon said. "China will likely break the bear market ."

Investors are fretting about a recession as global growth slows, inflation surges, and the Federal Reserve aggressively hikes interest rates to try to tame soaring prices.

Data on Friday showed economic growth in China — the world's largest commodities consumer — almost ground to a halt in the second quarter. Gross domestic product expanded by just 0.4% year on year, missing expectations for an increase of 1% and well below the first quarter's 4.8%, as COVID lockdowns around the country choked off normal activity.

Stagnant demand has dragged on other other major commodities as well, with crude oil plummeting to its pre-war level of below $100 a barrel and lumber tumbling over 20% over the last three months as soaring mortgage rates curb demand.

"Towards commodities, you have disinflationary pricing," Virtus Investment Partners' chief market strategist Joe Terranova said earlier this month. "The price of oil is below $100, copper is down and it expands beyond that, it's lumber, agriculture, and soft commodities."

"The commodities story is a weak one," he added.