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Copper Slumps to Two-Week Low As Virus Triggers Growth, Demand Concerns

Summary:
Copper futures are slumping to their lowest levels in two weeks as the Wuhan coronavirus added to economic growth and metal demand concerns in China. The industrial metal is also taking a hit on record annual output in Chile, which comes as global stockpiles are diminishing. This is driving the smart money into net long positions as investors are bullish on the red metal’s prospects for 2020. March copper futures tumbled %excerpt%.025, or 0.86%, to .7695 per pound at 14:43 GMT on Wednesday on the Comex division of the New York Mercantile Exchange. Copper prices are trading the lowest levels since the beginning of January, extending their tepid start to the new year. The Chinese government confirmed that the Wuhan virus has killed 17 people and there are nearly 500 confirmed cases. Authorities

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Copper futures are slumping to their lowest levels in two weeks as the Wuhan coronavirus added to economic growth and metal demand concerns in China. The industrial metal is also taking a hit on record annual output in Chile, which comes as global stockpiles are diminishing. This is driving the smart money into net long positions as investors are bullish on the red metal’s prospects for 2020.

March copper futures tumbled $0.025, or 0.86%, to $2.7695 per pound at 14:43 GMT on Wednesday on the Comex division of the New York Mercantile Exchange. Copper prices are trading the lowest levels since the beginning of January, extending their tepid start to the new year.

The Chinese government confirmed that the Wuhan virus has killed 17 people and there are nearly 500 confirmed cases. Authorities are ramping up efforts to limit the outbreak. The event is triggering some consternation in global financial markets as traders worry that the virus might impact economic growth and curtail the nation’s demand for copper.

Also in China, the State Administration for Market Regulation published new standards and regulations for high-grade copper and aluminum scrap metal. Beijing has aimed at reducing solid waste imports to zero by the end of the year, and these regulations could highlight what will and will not be allowed into the nation in the second half of 2020. Overall, China will categorize certain copper scrap as “renewable copper material.”

On Wednesday, Antofagasta, one of the world’s largest copper producers, reported a 5.8% decline in production in the fourth quarter. It attributed the drop to civil unrest in Chile, but the company still posted record annual output.

Meanwhile, hedge funds and money managers are building their net-long positions in copper to the highest level since April 2019, according to the Commodity Futures Trading Commission (CFTC).

Although the biggest firms on Wall Street are bullish on the red metal, some other analysts say prices will likely be more volatile amid geopolitical issues, market trends, and trade.

Eleni Joannides, Wood Mackenzie Principal Analyst, wrote in analysis:

As we look to 2020, the risk is that wider factors will once again influence price. The geopolitical issues that have surfaced since the start of the year could derail the rally that emerged in December 2019. On the other hand, further progress in resolving trade disputes will likely encourage a faster than anticipated recovery in demand and underpin prices.

This year, we are forecasting that positive mine supply growth of 1.3% — after disruptions — will be offset by a recovery in demand. The resulting draw down in total cathode stocks by year-end should be positive for prices.

In other metal markets, February gold futures shed $2.60, or 0.16%, to $1,555.50 per ounce. March silver futures picked up $0.03, or 0.18%, to $17.84 an ounce. March platinum futures added $7.20, or 0.71%, to $1,014.70 an ounce. March palladium futures spiked $97.80, or 4.38%, to $2,330.50 per ounce.

If you have any questions and comments on the commodities today, use the form below to reply.


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Andrew Moran
I am a full-time professional writer. Prior to my self-employment, I worked as a reporter for Digital Journal covering the politics beat and The Toronto Times reporting on the city’s entertainment scene. I currently write mostly about business, marketing and finance

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