Metal Exchange

LME Copper rebounds on hope for stimulus after dire factory data

Paul Ploumis
March 02,2020 07:14 AM
LME Copper rebounds on hope for stimulus after dire factory data

LONDON, March 2 (Reuters) - Copper and other industrial metals bounced on Monday on hopes that global central banks will inject stimulus into sagging economies shaken by the coronavirus outbreak.

The extent of the impact on top metals consumer China emerged when data showed factory activity suffered the sharpest contraction on record in February while other Asian manufacturing sectors also took a beating.

The Organisation for Economic Cooperation and Development warned the virus is plunging the world economy into its worst downturn since the global financial crisis.

“The worse the situation becomes, the bigger response the market is looking for. We’re basically pricing in an imminent rate cut in the U.S., and another two over the coming three months,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

“But we don’t have a mortality crisis, we have a confidence crisis and whether one or two rate cuts will have any impact on that in the short term remains to be seen,” he added.

“It’s very critical whether we’re just going to have a Monday bounce following by renewed weakness or whether the market can string together a couple of days of consolidation.”

Three-month copper on the London Metal Exchange (LME) had gained 0.8% to $5,678 a tonne by 1045 GMT after sliding to a low of $5,533 on Friday.

Copper has shed 10% since touching an eight-month peak of $6,343 in mid-January.

* NICKEL: LME nickel was the biggest gainer on the exchange, climbing 2.4% to $12,550 a tonne, rebounding from an eight-month low hit on Friday.

Prices also got support after top nickel producer Indonesia reported its first coronavirus cases, creating uncertainty over ore supply.

“If the situation gets out of control (in Indonesia) then production of nickel ore and nickel pig iron will decrease,” said a nickel analyst.

* CHINA: Nearly 300 million people have gone back to work in China since the Lunar New Year break as more companies restart business and coronavirus travel restrictions ease, although many small firms are still struggling to find enough workers to run plants.

* AUTOMOBILES: Two more Chinese cities heavily reliant on car manufacturing plan to offer incentives to bolster auto sales hit by the outbreak.

* PRICES: LME aluminium advanced 0.4% to $1,702 a tonne, zinc rose 0.8% to $2,037, lead climbed 1.5% to $1,876 and tin added 1% to $16,450.

* For the top stories in metals and other news, click or (Additional reporting by Mai Nguyen in Hanoi, editing by Ed Osmond)

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