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Copper Sinks to Four-Month Low Amid Coronavirus Concerns

January 28, 2020 at 19:22 by Andrew Moran

Copper futures are trading at their worst levels in about five months and recently recorded its worst week since 2015. The industrial metal’s declines have been driven by concerns over the Wuhan coronavirus and fears that it will impact the Chinese economy. Despite bullish data in recent weeks, the consensus is that Beijing’s rebound will subside in the short-term and suffer a disappointing first quarter.

March copper futures tumbled $0.015, or 0.55%, to $2.5835 per pound at 17:45 GMT on Tuesday on the Comex division of the New York Mercantile Exchange. The red metal has cratered about 8% so far this year and it is trading at its worst level since September. With the coronavirus outbreak spreading throughout China and the rest of the world, prices could slide even further during Q1.

China accounts for roughly half of global copper consumption. Last year, economic growth slumped to a 30-year low, driven by sluggish domestic demand and global trade uncertainty. The Chinese economy signaled that it was turning a corner and would rebound in 2020, which was evident in the yuan’s appreciation. However, now that the coronavirus could impact everything from retail sales to manufacturing, forecasts anticipate a disappointing January-to-March period for the GDP.

According to the US Commodity Futures Trading Commission (CFTC), net speculative long positions in copper has declined by 2.5% since last week. Inventories at London Metal Exchange-approved warehouses climbed by 600 tons. The relative strength index (RSI) on daily LME charts suggest the red metal had been oversold.

Is the optimistic outlook from late last year gone? A recent Reuters poll of economists suggests that copper prices will perform well throughout the rest of the year amid the global economic recovery and supply problems. Short-term, however, copper prices could have a hard time posting gains.

In other metal commodities, February gold futures shed $7.00, or 0.44%, to $1,570.40 per ounce. March silver futures plunged $0.56, or 3.11%, to $17.495 an ounce. March platinum futures picked up $1.00, or 0.1%, to $992.60 per ounce. March palladium futures soared $22.50, or 1.04%, to $2,196.10 per ounce.

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