irsum_2115511bInvestors in vital industrial metals such as copper and iron ore will have their nerves tested again this week after China’s unfolding debt crisis caused volatility on commodity markets. All the warning signals are now pointing to a continuing slide in prices as the full extent of China’s economic problems emerges and bearish sentiment grips the large commodity trading houses. Fears over a possible credit crunch in China have blown away previous assumptions that 2014 would be a year of steadily rising prices for industrial commodities as the global economy continued to recover. Copper prices have fallen 14pc so far this year to about $3 a pound on futures markets. Iron ore has tumbled to an 18-month low and closed the week at around $104 per tonne. After years of turning a blind eye, China’s government is finally getting serious about reining in the country’s poorly regulated shadow banking system, which has grown so big that it could derail the world’s second-largest economy. Beijing has also moved to restrict credit to steel smelters at a time when real demand is slowing fast. Official data showed an 18pc drop in China’s exports last month. MORE