Copper extended losses overnight after US officials flagged an extended economic downturn brought on by coronavirus, hitting the metal used as a gauge of economic health.
The potential for a second wave of coronavirus infections in top consumer China and a resurgence in US-China trade frictions also weighed on sentiment, analysts said.
US Federal Reserve Chair Jerome Powell warned on Wednesday of an extended period of weak economic growth due to the coronavirus pandemic, which has already led to a record pace of job losses.
“The Fed’s comments show that they are pretty cautious about the prospect of economic recovery, so that isn’t great for copper,” said Colin Hamilton, BMO Capital Markets’ head of commodities.
Meanwhile, China said it would step up COVID-19 testing and screening to prevent a rebound of the deadly outbreak after new cases were reported in northeastern provinces.
Benchmark copper on the London Metal Exchange (LME) was down 0.5 per cent at $US5,199.50 a tonne by 1600 GMT.
The metal, widely used in power and construction, fell for a its fourth straight session and was on track for its biggest weekly fall since March.
US President Donald Trump on Thursday said he was very disappointed in China over its failure to contain the novel coronavirus, saying the worldwide pandemic cast a pall over his US-China trade deal.
After about a month of steady declines, inventories of copper in warehouses monitored by the LME jumped 25 per cent to their highest since October, at 282,675 tonnes.
LME copper remained in a deep contango, indicating plentiful supply. The discount of LME cash copper to the three-month contract was at around $US30 a tonne, compared with a discount of $US2 in March.
China’s Jiangxi province on Thursday unveiled measures including tax breaks and preferential loan terms to help copper producers, after the coronavirus outbreak hit demand and prices for the metal.
The Mexican government said as of Monday, mining, construction and manufacturing of transport equipment will be considered essential activities, paving the way for miners to reopen operations and undermine prices.
“We are expecting more concentrate supply in the market in the next few days as miners ramp up,” BMO’s Hamilton said.
The number of Americans filing for unemployment benefits fell less than expected last week, suggesting a second wave of layoffs in industries and jobs not initially impacted by business closures caused by the pandemic.
China needs more active fiscal policy as pressure on its economy is still increasing, Finance Minister Liu Kun said on local media.
LME aluminium eased 0.2 per cent to $US1,477 a tonne, zinc dropped 0.6 per cent to $US1,963, lead gained 1.4 per cent to $US1,622.50, tin shed 0.9 per cent to $US15,035, and nickel fell 1.5 per cent to $US12,065.