The copper price dropped further on Monday as the deadly coronavirus outbreak in China, where 40 million people are now under lockdown in the central part of the country, added to worries about slowing economic growth in the globe’s top commodities importer.
Seven consecutive down days in New York saw copper for delivery in March losing 7.2 percent in value, falling to a seven-week low of $2.678 a pound ($5,905 a tonne) in New York.
Caroline Bain, chief commodities economist at Capital Economics in London said in a research note previous epidemics, such as the outbreak of SARS in February 2003, may offer a rough guide on what to expect going forward:
Back then, the Goldman Sachs Commodity Price index initially shed more than a tenth of its value, but this loss was fully recovered a few months after the disease was brought under control in July 2003.
China imports more than half the world’s copper and controls more than three-quarters of the seaborne iron ore trade.
Iron ore stabilized after losing 3.4 percent yesterday with benchmark Northern China import prices for 62 percent Fe fines tracked by Fastmarkets MB pegged at $93.71 a tonne on Friday.
Capital Economics said even before the coronavirus outbreak, cooling property construction was likely to weigh on economic activity and industrial metals and minerals prices in China in the coming quarters.
Global copper output has fallen, and full-year imports of refined copper fell six percent in 2019, but concentrate imports surged to 22 million tonnes an 11.6 percent gain on record imports the year before. Chinese imports of iron ore topped 1 billion tonnes for the third year in a row in 2019.
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