Copper prices steadied as the market focused on stagnating economic activity and falling demand due to the coronavirus crisis, but production cuts by major miners due to lockdowns provided support.
Benchmark copper on the London Metal Exchange was up 0.3 per cent at $US5,214 a tonne at 1600 GMT.
Prices of the metal used in the power industry and construction touched a six-week high of $US5,269 a tonne on Monday, a gain of 20 per cent since the four-year low of $US4,371 hit on March 19.
“Copper price gains are premature given the looming possibility of a worldwide recession,” said Commerzbank analyst Eugen Weinberg.
“We’ll probably see lower copper prices with the release of data on industrial activity over coming weeks.”
More than 3.03 million people have been reported to be infected by the novel coronavirus globally and 210,263 have died, according to a Reuters tally, as of 0200 GMT on Tuesday.
China accounts for around half of global base metals consumption.
Demand is closely linked to industrial activity, clues to which will be seen in surveys of purchasing managers in the manufacturing sector due on Thursday.
Analysts at Refinitiv have cut their forecast for global copper mine output in 2020 by 2.4 per cent to 19.6 million tonnes.
Last year, mine production was 20.36 million tonnes.
“The supply issue is quite severe. You do not have enough copper concentrate and at the same time there is not much supply of scrap copper,” said Helen Lau, analyst at Argonaut Securities.
Expectations of weaker demand in the short term can be seen in the $US26 a tonne discount for the cash over the three-month copper contract.
Similarly for aluminium, the discount of $US37 a tonne for the cash over the three-month contract indicates a massively oversupplied market.
“In the first quarter of 2020, global primary aluminium demand decreased by 6.4 per cent to 14.43 million tonnes,” Russian aluminium producer Rusal said.
“In the rest of the world demand dropped by 6.5 per cent to 6.6 million tonnes, while Chinese demand decreased by 6.3 per cent to 7.83 million tonnes.”
Three-month aluminium was down 0.2 per cent at $US1,504.5 a tonne.
Another indicator of weak aluminium demand are inventories in LME approved warehouses at 1.347 million tonnes are up 40 per cent since March 17 and the highest since the middle of January.
Zinc was up 1.5 per cent at $US1,933 a tonne, lead gained 0.5 per cent to $US1,643.5, tin fell 0.6 per cent to $US15,360 and nickel climbed 0.5 per cent to $US12,305.