The copper price fell sharply again on Monday as China, responsible for more than 50% of the world’s copper consumption, struggles to control the deadly coronavirus outbreak.
Eight consecutive down days in New York saw copper for delivery in March losing 10.2% in value, falling to a more than 3-month low of $2.592 a pound ($5,715 a tonne) on the Comex market in New York. On the LME, copper suffered its longest losing streak in six years.
The Chinese government ~6% growth target for 2019 “is likely non-negotiable”
BMO Capital said in a research note that the Beijing’s response to the outbreak, assuming it can be brought under control, could be significant.
The investment bank believes the Chinese government ~6% growth target for 2019 “is likely non-negotiable in order to meet the doubling of per capita GDP promised by President Xi in 2020 versus 2010”:
And with consumption weaker, this will likely involve more fixed asset investment-heavy government spending.
As a result, we may see another push into infrastructure projects into mid-year, while property restrictions could be further eased.
For metals and bulk commodity demand, we see a slightly weaker Feb-March than may have been anticipated, but limited changes to expectations for the year as a whole.
Other industrial metals, where China’s dominance is even more pronounced, were also trading down on Monday. Nickel fell 2.8% to $12,615 a tonne, the lowest level since early July while zinc prices gave up more than 4% to a one-month low of $2,240 a tonne.