Copper rebounds on stimulus hopes
Copper and other industrial metals prices bounced back overnight on hopes that global central banks will inject stimulus into sagging economies shaken by the coronavirus outbreak.
The extent of the impact on top metals consumer China emerged when data showed factory activity suffered the sharpest contraction on record in February while other Asian manufacturing sectors also took a beating.
The Organisation for Economic Cooperation and Development warned that the virus is plunging the world economy into its worst downturn since the global financial crisis.
"The worse the situation becomes, the bigger response the market is looking for. We're basically pricing in an imminent rate cut in the US, and another two over the coming three months," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
"But we don't have a mortality crisis, we have a confidence crisis, and whether one or two rate cuts will have any impact on that in the short term remains to be seen," he said.
Three-month copper on the London Metal Exchange rose 1.2 per cent to $US5,700 a tonne in final open-outcry trading after sliding to a low of $US5,533 on Friday.
Copper has shed about 10 per cent since touching an eight-month peak of $US6,343 in mid-January.
LME nickel jumped 3.7 per cent in closing rings to reach $US12,700 a tonne, the biggest one-day gain since last August, and rebounding from an eight-month low hit on Friday.
Prices gained support after top nickel producer Indonesia reported its first coronavirus cases, creating uncertainty over ore supply.
"If the situation gets out of control (in Indonesia) then production of nickel ore and nickel pig iron will decrease," said one nickel analyst.
Nearly 300 million people have gone back to work in China since the Lunar New Year break as more companies restart business and coronavirus travel restrictions ease, though many smaller businesses are still struggling to find enough workers to run plants.
Two more Chinese cities heavily reliant on car manufacturing plan to offer incentives to bolster auto sales hit by the outbreak.
There is heavy open interest in LME aluminium option strikes ahead of the expiry on Wednesday, Alastair Munro at broker Marex Spectron said in a note.
There are 5,400 lots at $US1,700 and 5,900 lots at $US1,750, he said.
LME aluminium advanced 1.4 per cent to close at$US1,718 a tonne, zinc added 0.1 per cent to reach $US2,022.50, lead slipped 0.1 per cent to $US1,847 and tin climbed 2.1 per cent to $US16,625.
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