SINGAPORE- London copper prices rose from a four-month low, after falling for 10 straight sessions, as investors gauged the economic impact of the new coronavirus outbreak in China.
Fears that the fast-spreading virus would hurt economic growth in China, which accounts for about half of global copper consumption and is a major user of many industrial metals, have dented sentiment.
“The issue for metals is factory shutdowns as China tries to contain the virus. Already it has extended the official holidays to Feb. 2, with many companies asking employees to stay home longer,” ANZ said in a note.
China was on a holiday until Jan. 30 to celebrate the Lunar New Year. However, the government extended the holidays to Feb. 2 to help contain the virus.
The London Metal Exchange index of six base metals hit its lowest in three years on Tuesday, having lost 7.7 percent since Jan. 20 when the outbreak started hitting market sentiment.
“The only event this can be compared to is the SARS virus in 2003. We suspect demand will take a similar path, with usage snapping back strongly after an initial dip,” ANZ said, referring to Severe Acute Respiratory Syndrome (SARS), which belongs to the same coronavirus family as the current outbreak.
Three-month copper on the London Metal Exchange (LME) rose 0.5 percent to $5,730 a ton, on course to end a streak of losses that sent the contract to its lowest since Oct. 10, 2019 in the previous session. — Reuters
