Copper prices eased overnight on fears of a second wave of coronavirus infections in top metals consumer China and in South Korea.
New infections have been reported in the last two weeks in Chinese cities including Wuhan, the epicentre of the first wave, and in South Korea, leading to fresh restrictions to control the spread.
Meanwhile, US infectious disease expert Anthony Fauci warned lawmakers that lifting sweeping lockdowns in the country could spark a new outbreak of the illness.
“If we do have a second wave of infections then it would mean lower demand for base metals in energy and for everything,” said Commerzbank analyst Daniel Briesemann.
China, the world’s second largest economy, accounts for nearly half of global copper consumption estimated at 24 million tonnes.
Three-month copper on the London Metal Exchange (LME) was 0.6 per cent lower at $US5,221 a tonne by 1607 GMT.
Demand destruction caused by the COVID-19 pandemic will dwarf the impact of supply disruptions for industrial metals such as aluminium and zinc, leaving heavy surpluses and inventory levels that will pressure prices and output this year.
“The bigger picture for metals right now is that on the supply side impacts are nowhere near enough to offset the surpluses,” said Capital Economics analyst Kieran Clancy.
Miners in top producer Philippines are allowed to operate at full capacity as the country begins to relax coronavirus-containment measures, but they must follow strict safety protocols.
Wanton obstructions on US investors under the pretext of national security runs counter to economic law and will end up costing the investors, the Chinese foreign ministry said on Wednesday.
Tensions between the world’s largest economies have been rising over the coronavirus and come on the back of the trade war that hurt metals demand and hit global markets.
International Monetary Fund (IMF) Managing Director Kristalina Georgieva said it was “very likely” the Fund would cut global growth forecasts further as the pandemic was hitting many economies harder than previously projected.
Copper premiums in bonded warehouses of Yangshan climbed to their highest since October 2018 of $US110 a tonne on favourable import arbitrage trade.
Zambia temporarily shut its border with Tanzania to enhance measures against the spread of the new coronavirus, delaying its main copper exports via Dar es Salaam.
LME aluminium gained 0.2 per cent to $US1,480 a tonne, zinc dropped 1.8 per cent to $US1,969.50, lead declined 2.3 per cent to $US1,600, tin eased 0.5 per cent to $US15,150, while nickel fell 0.4 per cent to $US12,256.