Tags: copper | prices | virus | fears

Copper Hits Lowest Since Jan 2016 on Deepening Coronavirus Fears

Copper Hits Lowest Since Jan 2016 on Deepening Coronavirus Fears
(Dreamstime.com)
 

Thursday, 19 March 2020 09:46 AM

Copper prices plummeted to four-year lows on Thursday as the spread of the coronavirus intensified fears about global economic growth and demand for industrial metals.

Economic activity in top consumer China and other major economies has been shredded by government measure to contain the virus, which has so far claimed nearly 9,000 lives.

Central banks across the world have stepped up efforts to prop up the global economy against the coronavirus, which has infected thousands of people and sparked fears of a looming recession.

"We are starting to get to the point where the recessionary news is partly priced in," Saxo Bank's head of commodity strategy Ole Hansen said. "But these low prices will essentially have an impact on producers' ability to produce metal."

Benchmark copper on the London Metal Exchange (LME) was trading 1.1% lower at $4,484 a tonne by 1130 GMT after earlier sinking as low as $4,371, the weakest since January 2016.

Prices of the metal are now within striking distance of their lowest since the global recession in 2009. The metal used by investors as a bellwether for global economic health has shed 14% so far this week.

Traders say falling costs for producing metal due to tumbling energy prices have lowered the floor for metal prices.

A stronger U.S. currency which makes dollar-denominated commodities more expensive for holders of other currencies is also expected to subdue demand.

"There is widespread fear among market participants that the global economy will slide into a deep recession and demand for metals will collapse completely," Commerzbank analysts said in a note.

Industrial metals markets are expecting further deliveries into exchange-monitored warehouses as end-users in Europe and the United States close down operations.

Inventories of copper in warehouses approved by the LME have jumped about 30% over the last week to 231,025 tonnes, mostly in South Korea and Taiwan.

In China, the world's top copper consumer, stocks of the metal in warehouses monitored by the Shanghai Futures Exchange are at four-year highs of 380,085 tonnes as supply swamped demand hit by the virus.

In aluminum , total stocks surged 41,775 tonnes to 1.01 million tonnes, reversing a steady trend of declining stocks.

Pressure on metals and mining companies globally is increasing, with many announcing delays and suspensions of operations as the virus disrupted supply chains and forced limits on staff.

Chilean copper miner Codelco will reduce operations for 15 days to comply with a national state of catastrophe while MMG Ltd reduced mining and the transport of concentrates in Peru.

Most base metals fell to their lowest since 2016.

LME aluminum was down 2.5% to $1,609 a tonne, zinc eased 1.7% to $1,832, lead shed 1.7% to $1,652, tin slipped 0.9% to $13,450 a tonne and nickel lost 2.3% to $11,145.

© 2020 Thomson/Reuters. All rights reserved.

   
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Copper prices plummeted to four-year lows on Thursday as the spread of the coronavirus intensified fears about global economic growth and demand for industrial metals.
copper, prices, virus, fears
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2020-46-19
Thursday, 19 March 2020 09:46 AM
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