Copper has fallen as moves by China’s central bank to bolster the economy were overshadowed by predictions of a deep global recession, which drove down stock markets and oil prices.
Copper, used in power and construction, has tumbled from above $US6,300 a tonne in mid January to as low as $US4,371 in March, but supply disruption and hopes of recovery in China, the biggest consumer of the metal, have lifted prices back above $US5,000.
The benchmark contract on the London Metal Exchange was down 1.1 per cent at $US5,106 a tonne at 1602 GMT on Wednesday.
“I don’t think we are out of the woods yet,” said Commerzbank analyst Daniel Briesemann, predicting that a rash of weak economic data could push copper back to $US4,500.
China’s central bank cut a key interest rate to a record low and reduced the amount banks must hold as reserves by about $US28 billion.
However, data on Friday is expected to show China’s economy suffered its first decline since at least 1992 in the first quarter. Factory data is also expected on Friday.
China reported a decline in new confirmed cases of the coronavirus on the mainland on Wednesday.
The International Monetary Fund said this week the global economy could shrink by 3.0 per cent this year – the steepest downturn since the Great Depression of the 1930s.
US manufacturing output dropped by the most in just over 74 years in March.
World share indexes fell, oil dived 7.0 per cent and investors took shelter in the dollar, driving it higher and making metals priced in the currency more expensive for non-US buyers.
Copper inventories in LME-registered warehouses rose to a six-month high of 261,225 tonnes.
The discount of cash copper against three-month metal widened to $US30, its biggest since January, suggesting plentiful nearby supply.
Copper inventories in the Shanghai Futures Exchange warehouse system touched a four-year high last month above 380,000 tonnes, but have since fallen to 317,928 tonnes.
Yangshan Chinese copper import premiums rose to a seven-month high of $US81.50, from $US55 in February, pointing to increased demand.
Copper imports in March rose 13 per cent from a year earlier.
LME aluminium was up 0.1 per cent at $US1,505.50 a tonne, zinc was up 0.3 per cent at $US1,927.50, nickel fell 1.0 per cent to $US11,765, lead rose 0.2 per cent to $US1,698.50 and tin was down 1.9 per cent at $US15,165.