Miners around the world have suspended operations and delayed expansions to prevent the spread of COVID-19.
The battle against the coronavirus continued this week, with countries stepping up their responses, leading base metals miners to shut down operations and delay expansions.
“The supply shock is something that is underestimated or underappreciated in the market,” Julius Baer analyst Carsten Menke told Reuters.
Copper prices were still trading below the US$4,000 per tonne mark this week, with the red metal hitting its lowest point this year at US$4,617.50 on Monday (March 23). However, prices had edged up by Thursday (March 26), when copper was changing hands for US$4,775.50; the metal stabilized on Friday (March 27) as supply cuts offset the slowdown in demand.
Miners around the world have suspended operations and delayed expansions to prevent the spread of COVID-19, with copper powerhouses Chile and Peru imposing stricter measures to fight the virus. Last week, the Democratic Republic of Congo, Africa’s largest copper producer, also declared a 48 hour lockdown in mining province Haut-Katanga.
These production delays and cuts, together with falling prices, are posing significant risks to global mine supply and project development, according to a report from Wood Mackenzie.
“At this stage, we are not assuming mine supply from these countries will stop in its entirety. However, we believe there is a significant risk that disruptions will escalate, and breach 5 percent this year,” said Research Director Nick Pickens.
Nickel has also been under pressure since January, but this week the base metal saw a rebound in prices. Starting Monday at US$11,055 per tonne, the metal made its way to US$11,221 by Thursday.
After falling below the US$1,700 per tonne level on Wednesday (March 25), zinc prices were back up on Thursday, trading at US$1,831.50. The metal finished the five day period almost neutral.
Sister metal lead had a less volatile week, trending upward for most of the timeframe. The metal kicked off Monday at US$1,608.50 per tonne to end Thursday at US$1,659.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.