Moody's says its aggregated metals price measure is "deep under" last month's average because of uncertainties stemming from trade-related issues.

"Since worries surrounding a trade war came to the fore following June 14's close, the base metals price index has sunk by 13%," Lonski said.

The Moody's price index had climbed since metal markets bottomed in 2016, peaking in February this year, but generally tracking well below the average performance through 2010 and 2011.

"Though the industrial metals price index's latest 52-week moving average tops its contiguous 52-week moving average of the span-ended July 17, 2017 by 19.9%, it remains 8.8% under [the] … recovery high for the span ended September 20, 2011. The latter 52-week observation overlapped very brisk annual growth rates for the world economy of 5.4% for 2010 and 4.3% for 2011," Lonski said.

"The roughly 10% average annual increase by China's real GDP of 2010-2011 goes far at explaining both 2010-2011's average annualised advances of 4.9% for world economic activity and 27% for the industrial metals price index. By contrast, current consensus expectations call for a slowing of China's economic growth from 2017's actual 6.9% to 6.6% in 2018 and 6.4% in 2019. In turn, the IMF expects the world economy to grow no faster than 3.9% in both 2018 and 2019 following 2017's 3.7% increase."

Lonski said the last severe bout of base metals price deflation was linked to problems in China and a run-up by US Treasury bond yields.

"Throughout the current business cycle upturn, advances by the 10-year Treasury yield have been difficult to sustain without an accompanying upswing by the industrial metals price index," he said.

"For example, when the 10-year Treasury yield's month-long average peaked for the current recovery at the 3.58% of February 2011, the base metals price index was merely 0.1% under its April 2011 high of the current upturn.

"In response to a 25% plunge by the base metals price index's moving three-month average from April 2011 to December 2011, the 10-year Treasury yield's accompanying three-month average sank from 3.48% to 2.05%, respectively.

"Until the base metals price index approaches its latest high of February 2018, the 10-year Treasury yield is unlikely to remain at or above 3% for long.

"In fact, there is a very real possibility that by later this summer, the industrial metals price index may begin to record year-to-year declines, which in the past were often accompanied by year-to-year declines for the 10-year Treasury yield.

"A year-to-year decline by the base metals price index could arrive fairly soon.

"July 18's industrial metals price index was less than each of its previous month-long averages starting with August 2017. Over the course of just one month, the industrial metals price index's yearly increase sagged from the 26.2% of June 18, 2018 to the 6.0% of July 18."