Copper prices have risen after data showed an unexpected rebound in factory activity in China, but were set for their worst quarter since 2011 as the coronavirus outbreak shut down swathes of the global economy, reducing the need for metals.
Benchmark copper was up 3.5 per cent at $US4,935.50 a tonne on Tuesday, touching its highest since March 18.
But it was down around 20 per cent over the January-March period.
Other industrial metals were between 10 per cent and 20 per cent lower in the first quarter.
Copper has steadied in the last week, helped by a stabilisation of global equities markets, a weakening of the US dollar and the closure of some mines due to coronavirus lockdowns.
But the hit to demand from the coronavirus outbreak would dwarf its impact on supply, Capital Economics analyst Kieran Clancy said.
Copper could fall as low as $US4,000 in the second quarter, he said. “It gets worse before it gets better, and the getting better part is dependent on these (virus) containment measures being lifted.”
In China, the world’s biggest metals consumer, the official manufacturing PMI rose to 52 in March from a record low of 35.7 in February, but analysts cautioned that a durable near-term recovery was far from assured.
China’s economy could grow by as little as 0.1 per cent this year, the World Bank said on Monday. Slowdowns in other countries grappling with the novel coronavirus are likely to depress demand for Chinese exports.
However, Chinese Yangshan import premiums at $US65 are the highest since December.
Capital Economics’ Clancy said even with production stoppages so far announced, the copper market could be oversupplied by 800,000 tonnes this year.
In China, which is lifting lockdown measures, supply was returning quicker than demand, he said.
China’s biggest copper producer Jiangxi Copper said it aimed to churn out 6.0 per cent more refined metal in 2020 than last year.
Chile’s copper output rose 8.3 per cent in February to 451,580 tonnes, government data showed.
Polish copper and silver producer KGHM is operating below its break-even point with copper below $US5,000, Prime Minister Mateusz Morawiecki said.
Rio Tinto said it would close one of the aluminium production lines at its 340,000-tonne a year smelter in Tiwai, New Zealand.
Vedanta Zinc International said it would suspend operations at its Skorpion Zinc mine and refinery in Namibia by the end of April.
Mining operations in the Philippines’ southern province of Surigao del Norte, home to most of the country’s nickel mines, will be suspended from April 1.
LME aluminium was up 0.2 per cent at $US1,533 a tonne, zinc was 2.2 per cent higher at $US1,914, nickel rose 1.0 per cent to $US11,480, lead gained 2.5 per cent to $US1,746.50 and tin was up 1.0 per cent at $US14,650.