Copper prices fall amid the resurgence of coronavirus fears
Copper prices dropped on Monday on concerns about the second wave of coronavirus. Uncertainty whether demand will recover soon or stay contained longer supported the fall.
Three-month copper on the London Metal Exchange (LME) was down 1.1% at $ 5,722 per ton.
Central bank stimuli unleashed purchases last week, helping drive a rise in the price of copper to $ 5,928, a 35% rise from mid-March and its highest level since late January.
The main support level for copper is $ 5,660, where the 200-day moving average is currently located.
Demand for the commodity has declined
Several Beijing districts set up security checkpoints and closed schools. They ordered people to have tests for COVID-19 on Monday after an unexpected surge in cases linked to the largest wholesale food market in Asia.
Also, in China, factories increased their production for the second consecutive month in May. However, the weaker-than-expected rise suggests that the recovery remains fragile.
Weak exports highlighted the pressure on China’s manufacturing industry, one of the major consumers of copper.
Global lockdowns because of the coronavirus pandemic continued to destroy the demand in copper. As a result, exports from China contracted last month. The demand for copper dropped slightly; however, the decline in imports has been most massive since January 2016.
Copper imports in the country dropped by 5.5% in May compared to the previous month. Last year copper imports were up 20.8% from the same period.
The China Nonferrous Metals Industry Association stated that Chinese copper prices might fall under downward pressure. The revival in consumption would lag in supply in the domestic market, as demand outside of China stays lukewarm.
The metal supply has been affected
Several associations of copper mining unions in Chile, the world’s largest producer of the metal, called on Sunday to assess the country’s continuity of operations. Despite the sustained increase in coronavirus infections, metal production has not been affected.
However, copper supply has been affected in other regions. Hudbay is not likely to open the long-planned expansion of its flagship Constancia mine in Peru at least four months. As the pandemic continues, the company can not negotiate with local communities around the pit. Administrators closed down Constancia mine for two months. It is operating now, however. However, the exact production is uncertain.
Among other metals, aluminum dropped 0.7% to $1,573, while zinc fell 0.4% to $1,969 and nickel lost 0.2% to $12,640 a ton.
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