January 27, 2020 / 11:45 AM / 20 days ago

METALS-Copper in longest losing streak for six years on China virus fears

    * Nickel slides to 6-1/2 month low
    * Copper drops for nine consecutive sessions

 (Updates with closing prices)
    By Eric Onstad
    LONDON, Jan 27 (Reuters) - Copper fell for a ninth
consecutive session on Monday, the longest losing streak in six
years, as investors worried that a spreading coronavirus
outbreak in China would hit demand in the world's biggest metals
consumer.
    Copper tumbled to its weakest in three months, with other
industrial metals also sliding as investors took flight. 
    The death toll from the virus rose to 81 on Monday as the
government extended the Lunar New Year holiday and more big
businesses shut down or told staff to work from home in an
effort to curb the outbreak.             
    Copper, regarded as a bellwether of the global economy, has
given up all of its gains since early December when a rally
pushed prices up nearly 10% to eight-month highs as investors
welcomed the first phase of a U.S.-China trade deal and hoped
for a rebound in economic growth. 
    "Chinese demand accounts for about 50% of the majority of
base metals," said BMO Capital analyst Timothy Wood-Dow, noting
the spread of the virus.
    "On Friday, we didn't know this, it seemed quite contained.
Now this wider geographical spread is very concerning, so that's
feeding through to the market."
    Wood-Dow added that Chinese economic growth could still hit
6% this year if the virus is contained, aided by the
government's determination to bolster the economy. 
    "Probably infrastructure investment will just be pushed back
to later in the year." 
    Benchmark three-month copper on the London Metal Exchange
(LME)         dropped 3.1% in final open-outcry trading to
$5,743 a tonne, its lowest since Oct. 18.
    LME copper last week posted its steepest weekly loss in five
years, falling 5.5%, as the virus spread.
    "Fingers crossed we will get good earning reports this week
from U.S. companies or else the panic selling will be even
worse," said one base metals trader who asked to remain
anonymous.
        
    FUNDAMENTALS
    * NICKEL: LME nickel         prices shed 2.8% to close at
$12,615 a tonne, its lowest since July 9. The net speculative
short position on the LME had risen to 2.9% of open interest
last Thursday, according to Marex Spectron estimates. "Whilst
modest in size, this is a level not seen in nickel since January
2019," the broker's Alastair Munro said in a note.    
    * LEAD STOCKS: On-warrant LME lead inventories
MPBSTX-TOTAL - material not earmarked for delivery - fell to
50,025 tonnes, the lowest since July 26 last year, daily LME
data showed.
    The premium for cash LME lead over the three-month contract
rose to $12 a tonne, the highest since Oct. 31, indicating
tighter supplies. It has moved from a discount of $21.25 two
weeks ago. 
    LME three-month lead         slipped 2.5% to close at $1,892
a tonne after touching $1,870, its weakest since Dec. 9.
    * PRICES: LME aluminium         finished 1% down at $1,764,
its lowest in nearly six weeks. Zinc         tumbled 4.3% to
$2,240, the lowest since Dec. 16, and tin         dropped 3.4%
to $16,270, its weakest in nearly two months. 
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 (Additonal reporting by Mai Nguyen in Hanoi and Zandi Shabalala
in London; Editing by Kirsten Donovan and David Goodman)
  
 
 
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