LONDON: Copper eased on Monday, retreating from a two-year high, as new cases of the novel coronavirus threatened to stall any revival in the global economy and in metals demand.
Three-month copper on the London Metal Exchange was down 0.6% to $6,410.50 in official trading. A week ago the metal touched a peak of $6,633 a tonne, the highest since 2018, up from a low of $4,371 in March.
A rebound in the economy of top metals consumer China and supply disruptions, mainly in the world's main producing region South America, has boosted prices.
But a surge in cases of the coronavirus has thrown into doubt any quick rebound in the global economy, hitting copper, which is also used as a bellwether for economic health.
"If the entire economy is being hurt by coronavirus then copper will be hit hard too," Commerzbank analyst Daniel Briesemann said, adding that the virus has reduced demand more than supply, pushing the market into a large surplus this year.
Large holdings of copper warrants have fuelled concern about nearby supplies on the LME market.
This can be seen in the premium for the cash over the three-month contract which was last at $11.30 a tonne, its highest May 2019.
Also indicating tightness on the LME market are cancelled copper warrants - metal earmarked for delivery - at 40% of total stocks of 195,825 tonnes.
Copper stocks in LME-approved warehouses fell to a six-month low at 157,350 tonnes. Meanwhile, Shangai Futures Exchange inventories climbed 59% to 158,647 tonnes in three weeks by Friday, their highest since May 22.
LME aluminium fell 0.2% to $1,658 a tonne, zinc was steady at $2,183, lead rose 0.7% to $1,828, tin was unchanged at $17,330 while nickel fell 0.3% to $13,187.
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