Copper prices edged into the red as investors struggled to calculate whether any coronavirus-related loss of metals demand would outweigh weaker output.
Worries about the virus spreading outside of China had pushed London Metal Exchange (LME) copper to a two-week low on Monday while zinc slid to its weakest since June 2016.
Most LME prices bounced in Asian trading on Tuesday as some investors regarded the sell-off as exaggerated and others locked in profits from bearish positions, but copper gave up its gains in European activity.
Three-month LME copper dipped 0.1 per cent to $US5,685 a tonne in final open-outcry trading.
“We initially estimated that the loss of Chinese demand for copper could be in the region of 500,000 tonnes for this year, but that even looks optimistic,” said Kieran Clancy at Capital Economics in London.
“But a number of copper producers are struggling to source raw material and labour, so that is leading to some cutbacks. From a fundamental perspective that could be an offsetting factor.”
The global copper market will probably end up in a surplus instead of a previously expected deficit, Clancy added.
* NICKEL: Prices gained support from potential supply problems after an official in Indonesia, the world’s leading nickel producer, said the coronavirus outbreak is likely to delay development of nickel projects worth about $US11 billion.
LME nickel rose 0.2 per cent to finish at $US12,450 a tonne, rebounding from its lowest in nearly eight months in the previous session.
* CHARGES: Spot treatment and refining charges for copper concentrate in China touched their highest in almost 11 months at $US75 a tonne on Monday, according to Asian Metal, as virus-hit smelters’ need for raw material drops.
* ZINC POSITION: The net speculative short position in LME zinc rose to 15 per cent of open interest, close to last year’s peak of 16 per cent, according to estimates by broker Marex Spectron.
* ZINC TECHNICALS: Zinc remains under pressure, but is expected to stabilise around the psychological $2,000 a tonne mark, Commerzbank technical analyst Axel Rudolph said in a note.
“Failure at the $US2,000 mark and the March 2015 low at $US1,981.00 would make us medium-term bearish.”
* PRICES: LME aluminium added 0.2 per cent to close at $US1,703 a tonne, zinc shed 0.8 per cent to $US2,030, lead gained 2.1 per cent to $US1,858 and tin rose 1.1 per cent to $US16,725.