Copper falls on recession fears despite China rate cuts

• China cut interest rates on its medium-term funding for financial institutions to a record low in an effort to combat the economic fallout from the pandemic.
• The most-traded copper contract on the Shanghai Futures Exchange (ShFE) closed 0.6pc down at 41,560 yuan ($5,884.69).

SINGAPORE: Copper prices fell on Wednesday on fears of a deep global economic recession despite supportive measures from top consumer China to bolster its economy.

Investors were spooked by comments from the International Monetary Fund (IMF), which said that the global economy could shrink by 3pc this year because of the coronavirus.

That would be the steepest downturn since the Great Depression of the 1930s.

China cut interest rates on its medium-term funding for financial institutions to a record low in an effort to combat the economic fallout from the pandemic.

Three-month copper on the London Metal Exchange (LME) fell 1pc to $5,111 a tonne by 0745 GMT, erasing earlier gains of as much as 0.4pc after China announced the rate cuts.

The most-traded copper contract on the Shanghai Futures Exchange (ShFE) closed 0.6pc down at 41,560 yuan ($5,884.69).

"China moves the real economy ...(but) I'm more worried if the U.S economy doesn't reopen in May," said one base-metals trader.

Copper, used widely in power, construction and manufacturing, is often seen as a gauge of global economic health.

FUNDAMENTALS

OTHER PRICES: LME aluminium rose 0.5pc to $1,510.50 a tonne and zinc fell 0.6pc to $1,911. In Shanghai, aluminium increased 1.5pc to 11,950 yuan a tonne, nickel was up 0.5pc at 97,240 yuan and lead fell 1.9pc to 13,845 yuan.

CHINA AUTOS: French automaker Renault is ditching its main passenger car business in China, the world's biggest vehicle market, after poor sales in the country.

PERU: The world's second-biggest copper producer hopes to emerge gradually from the economic hibernation aimed at containing the virus by May, President Martin Vizcarra said.