Copper falls on recession fear

Copper fell on Wednesday as moves by China's central bank to bolster the economy were overshadowed by predictions of a deep global recession, which drove down stock markets and oil prices.

Copper, used in power and construction, has tumbled from above $6,300 a tonne in mid January to as low as $4,371 in March, but supply disruption and hopes of recovery in China, the biggest consumer of the metal, have lifted prices back above $5,000.

The benchmark contract on the London Metal Exchange (LME) was down 1.1% at $5,106 a tonne at 1602 GMT on Wednesday.

"I don't think we are out of the woods yet," said Commerzbank analyst Daniel Briesemann, predicting that a rash of weak economic data could push copper back to $4,500.

China's central bank cut a key interest rate to a record low and reduced the amount banks must hold as reserves by about $28 billion.

However, data on Friday is expected to show China's economy suffered its first decline since at least 1992 in the first quarter. Factory data is also expected on Friday.

China reported a decline in new confirmed cases of the coronavirus on the mainland on Wednesday.

The International Monetary Fund said this week the global economy could shrink by 3% this year - the steepest downturn since the Great Depression of the 1930s.

US manufacturing output dropped by the most in just over 74 years in March.

World share indexes fell, oil dived 7% and investors took shelter in the dollar, driving it higher and making metals priced in the currency more expensive for non-US buyers.

Copper inventories in LME-registered warehouses rose to a six-month high of 261,225 tonnes. The discount of cash copper against three-month metal widened to $30, its biggest since January, suggesting plentiful nearby supply.

Copper inventories in the Shanghai Futures Exchange (ShFE) warehouse system touched a four-year high last month above 380,000 tonnes, but have since fallen to 317,928 tonnes.

Yangshan Chinese copper import premiums rose to a seven-month high of $81.50, from $55 in February,

pointing to increased demand. Copper imports in March rose 13% from a year earlier.

LME aluminium was up 0.1% at $1,505.50 a tonne, zinc was up 0.3% at $1,927.50, nickel fell 1% to $11,765, lead rose 0.2% to $1,698.50 and tin was down 1.9% at $15,165.

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