The London Metal Exchange open-outcry ring went dark for the first time since World War II on Monday and aluminium prices slumped to their lowest since June 2016 on fears of a severe global recession.
The 143-year-old LME temporarily closed its circle of padded, red-leather seats, Europe's last open-outcry trading venue, in response to the coronavirus pandemic. The transition to full electronic trading on the LME went smoothly, but volumes were patchy, traders said.
"Things are going okay, it's just difficult to see volumes as there's little liquidity. It also feels very weird trading while looking at my garden, it's really lacking market atmosphere," one trader said from his home. Base metals joined stocks, oil and other financial markets in a sell-off on Monday while Shanghai copper fell to the weakest in nearly 11 years.
"Right now we're seeing demand falling off a cliff, consumer confidence is shaken across the world, and commodities are responding accordingly," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. "Sentiment also got a knock overnight after the US Congress struggled to reach agreement (on an economic stimulus package). The focus will be on whether they can get a package over the finish line, that may give some relief to the market."
The US Senate on Monday moved towards another vote on a far-reaching coronavirus stimulus package, though Republicans and Democrats said they still had not resolved the differences that stalled the package over the weekend. Benchmark LME aluminium slid as much as 2.8% to $1,538.50 a tonne, the lowest since June 2016. It had pared losses to $1,562, down 1.3%, by 1700 GMT.
Aluminium, widely used in transport and packaging, has shed 16% since hitting a five-month peak of $1,835 a tonne in early January. LME copper lost 3.7% to $4,630 a tonne, while Shanghai copper prices dropped to their lowest in nearly 11 years.
The most-active copper contract on the Shanghai Futures Exchange (ShFE) plummeted to its lowest since June 2009 in early trade at 35,300 yuan ($4,960.72) a tonne, before recovering slightly to close 3.1% lower at 37,200 yuan a tonne. A slide in copper demand as much of the world's manufacturing sector is disrupted by the coronavirus outbreak is expected to fuel a surplus this year of up to a million tonnes in what was expected to be a balanced market, analysts said.
Losses in aluminium were partially due to worries about big surpluses piling up after data showed on Friday that year-on-year global output of the metal rose 3.8% in February even though month-on-month production declined 6.2%.
"All in all, a relatively muted supply response to extremely weak demand is a key reason why we expect the aluminium market to be in an enormous surplus of around 2-3 million tonnes in 2020," Kieran Clancy at Capital Economics said in a note.
LME nickel declined 3% to $10,890 a tonne, the weakest since Jan. 4, zinc dropped 2.1% to $1,809.50 and lead eased 2.5% to $1,618. Thinly-traded tin tumbled 5.7% to $13,150 after touching $12,700, a new low since July 2009.
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