Despite edging up on Friday on the back of central bank stimulus measures, copper is on track for a weekly decline of about 10 percent.
Fears about the potential impact the coronavirus outbreak could have on demand continued to hurt base metals this week, with copper touching levels not seen since 2009.
The red metal started the week trading at US$5,250 per tonne and continued to plummet throughout the five day period. On Thursday (March 19), copper was changing hands for US$4,684.
Despite edging up on Friday (March 20) on the back of central bank stimulus measures, copper is headed for a weekly decline of about 10 percent — its worst week since 2011.
On a positive note for copper, Chinese steel and copper inventories fell this week for the first time in months, a sign that demand in the Asian country may be on a recovery path, as per data from MySteel.
“We are not out of the woods yet,” ING Senior Commodities Strategist Wenyu Yao said, adding that metal supplies could be affected by countries implementing tighter measures around travel and trade.
In fact, as a result of the outbreak and government actions, many base metals miners, including major diversified miners Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) and Glencore (LSE:GLEN), have taken precautions in an effort to prevent further spread of the coronavirus.
Other base metals this week followed copper’s trend, with zinc prices also on track for a weekly loss.
Zinc kicked off the week at US$1,931 per tonne, falling to US$1,819 by Wednesday (March 18) — its lowest point this week. Prices inched up on Friday, but have been trading below the US$2,000 mark since the beginning of March.
“If you look at where zinc is today … if you look at what a mine has taken back in terms of revenue, this is comparable to levels in 2015 to 2016, when you had major cuts in supply,” Ryan Cochrane of Open Mineral recently told the Investing News Network (INN). “It’s comparatively harder for miners right now, you are starting to see miners cut back.”
Sister metal lead had a volatile week, but remained almost neutral. On Monday (March 16), lead prices were standing at US$1,684 per tonne, but ended the week at U$1,676.
After rebounding last week, nickel fell back to trading below the US$11,000 per tonne level this week. It started Monday at US$11,770 per tonne, but was trading as low as US$11,225 by Thursday (March 19).
“(COVID-19) is such a rapidly changing story that we are yet to fully see the impact throughout the value chain and therefore understand how large the impact might be on demand,” Alex Laugharne, principal consultant at CRU Group, told INN.
Laugharne said that once CRU Group revises its forecasts, its nickel outlook will be different than what was previously expected at the end of 2019, but it is hard to say to what extent.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.