Copper hit a five-month low on Friday as funds and traders sold on the expectation of slowing demand in top consumer China, where the coronavirus outbreak threatens to hit economic activity. Benchmark copper on the London Metal Exchange ended down 0.4% at $5,567 a tonne. The price of the metal used by investors as a bellwether of economic health hit $5,533.50 earlier, the lowest since early September and a drop of 12% since Jan. 16.
"It is an extreme event, nobody can tell what the final impact will be. Industrial metals such as copper in the short term will stay under pressure," said Wenyu Yao, senior commodities strategist at ING Bank.
The premium for the cash over the three-month zinc contract has ticked up to $16 a tonne because of worries about supplies on the LME market, where stocks have fallen below 50,000 tonnes to a 20-year low. One company holding large amounts of zinc warrants has also contributed to concerns.
Three-month zinc gained 0.5% to $2,200 a tonne from an earlier $2,163, the lowest since July 2016. A large holding of tin warrants and low stocks on the LME market have also pushed up the premium for the cash over the three-month tin contract to a one-month high at $10 a tonne. Three-month tin rose 2% to $16,350.
Traders said much of the tin outflows from LME approved warehouses was heading for China. This can be seen in tin stocks monitored by the Shanghai Futures Exchange at nearly 7,000 tonnes from below 3,000 tonnes in late November. Aluminium fell 0.5% to $1,722, nickel added 1.8% to $12,850 and lead climbed 3% to $1,879 a tonne.