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Copper Pares Steep Losses As Investors Fear Coronavirus Will Hurt Demand

Summary:
Copper futures are settling in the green midweek after paring steep losses in intraday trading. Although the industrial metal has plunged by as much as 8% over the last month, copper prices have been holding steady this week, driven primarily by China’s stimulus measures. Beijing is currently the world’s largest copper consumer, so any economic impact from the Wuhan coronavirus could hurt the red metal. March copper futures edged up %excerpt%.0035, or 0.13%, to .6075 per pound at 19:34 GMT on Wednesday on the Comex division of the New York Mercantile Exchange. Copper fell as much as 3% midweek before paring those losses. Year-to-date, the industrial metal is down 6.8%. This week, China announced a string of fiscal and monetary stimulus measures to shield the world’s second-largest economy from

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Copper futures are settling in the green midweek after paring steep losses in intraday trading. Although the industrial metal has plunged by as much as 8% over the last month, copper prices have been holding steady this week, driven primarily by China’s stimulus measures. Beijing is currently the world’s largest copper consumer, so any economic impact from the Wuhan coronavirus could hurt the red metal.

March copper futures edged up $0.0035, or 0.13%, to $2.6075 per pound at 19:34 GMT on Wednesday on the Comex division of the New York Mercantile Exchange. Copper fell as much as 3% midweek before paring those losses. Year-to-date, the industrial metal is down 6.8%.

This week, China announced a string of fiscal and monetary stimulus measures to shield the world’s second-largest economy from the impact of Covid-19. Just some of the efforts include across-the-board tax cuts, a reduction in interest rates, quick approval of construction projects, and encouraging banks to “tolerate” more bad loans. President Xi Jinping hinted in a recent televised appearance that more fiscal stimulus is coming, while analysts anticipate the central bank will unleash monetary tools.

On Monday, China issued tariff exemptions to nearly 700 US goods, including copper and aluminum scrap. The Ministry of Finance Customers Department verified in a note on Tuesday that importers can buy copper without the 25% levy. This is good news for the mining sector since Beijing used to import as much as 700,000 tons of copper – it imported just 89,287 tons from the US last year.

While markets are optimistic that the coronavirus is winding down, commodity traders are less certain. For the metal commodity investors, nobody knows how long the Chinese economy will feel the harmful effects of the virus outbreak, especially with private companies offering a bearish tone to the public.

Apple, for instance, told shareholders earlier this week that it would unlikely meet its March quarter sales forecast as its manufacturing facilities in China have only recently reopened.

The nation’s manufacturing sector is in the middle of a slowdown. The latest Shanghai Futures Exchange (ShFE) inventory numbers highlight stalled activity as stocks are at an 11-month high of 262,000 tons.

But some are positive that copper prices will soon recover in the coming months. Chilean mining minister Baldo Prokurica, who oversees the world’s largest copper producer, told reporters that he does not believe the global downturn “will last very long.”

In other metal markets, April gold futures added $8.80, or 0.55%, to $1,612.40 per ounce. March silver futures picked up $0.20, or 1.10%, to $18.35 an ounce. March platinum futures tacked on $15.70, or 1.58%, to $1,009.60 per ounce. March palladium futures spiked $106.80, or 4.28%, to $2,604.39 an ounce.

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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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