Copper pulls back from one-week high

Copper tripped into the red on Tuesday, retreating from its highest level in more than a week, despite news of an emergency cut in US interest rates and hopes about more stimulus spending.

The move by the US Federal Reserve was its first emergency rate cut since 2008 at the height of the financial crisis.

One trader said that fuelled worries that the economic impact of the coronavirus outbreak could last longer than many expect as the disease spreads rapidly outside of China.

"The Fed or coordinated monetary easing will not necessarily help demand for copper outside China," said Xiao Fu, head of commodity market strategy at Bank of China International, adding that inventories would likely rise and weigh on prices.

Three-month copper on the London Metal Exchange failed to trade in final open-outcry activity, but was bid down 0.6 per cent at $US5,665 a tonne after touching $US5,780.50, its highest since February 21.

"We've been looking at our metals forecasts and we have revised them down because we do think there's going to be some lost demand this year, but we still expect higher prices by the end of the year," said Caroline Bain, chief commodities economist at Capital Economics in London.

Capital Economics expects prices to recover in the second half of the year, pushing LME copper to $US6,200 by the end of 2020, she added.

Spot treatment charges for zinc concentrate in China have fallen for the first time in almost two years, data from industry pricing and information provider Asian Metal shows, indicating a slight tightening in supply.

The CRU World Copper Conference in Santiago and Cesco Week, among the largest annual gatherings of copper miners, have been cancelled due to concerns over travel risks associated with the coronavirus outbreak.

The net speculative short position for LME nickel had climbed to 6.3 per cent of open interest as of Friday, compared to the peak this year of 9.9 per cent, according to estimates by broker Marex Spectron.

Marex Spectron has purchased scrap metals company Tangent Trading Ltd, the first entry of the commodities broker into a sector it sees having growth potential due to increasing focus on sustainability.

LME aluminium rose 0.2 per cent in closing rings to trade at $US1,722 a tonne, nickel shed 1.1 per cent to $US12,560, zinc dropped 2.3 per cent to $US1,975.50, lead dipped 0.3 per cent to $US1,841.50 and tin rose 0.8 per cent at $US16,750.

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