Off The Wire
Copper heads for sharpest weekly drop in nearly 19 months on virus fears
* Virus sparks fears of metals demand hit
* Copper stocks in China and LME rise this week (Adds official prices)
By Zandi Shabalala
LONDON, Jan 24 (Reuters) - Copper prices steadied on Friday but remained on track for their biggest weekly fall in almost 19 months on worries that the spread of the coronavirus could hit the Chinese economy and metals demand.
China stepped up measures to contain the virus that has killed 25 people and infected more than 800, suspending public transport in 10 cities and shutting temples over the Lunar New Year.
The virus is expected to dent China’s growth after months of economic worries over trade tensions with the United States.
“If the outbreak is prolonged and deters activities after the New Year’s holidays, it will potentially impact copper demand and that is the main worry at the moment,” said ING Bank’s senior commodity strategist Wenyu Yao.
Snapping a seven-session losing streak, benchmark three-month copper on the London Metal Exchange (LME) had edged up 0.2% to $5,996 in official trading rings.
However, the metal used in power and construction was still on track for a 4% weekly loss, its biggest since July 2018.
INVENTORIES: A sharp rise in copper stocks has also weighed on prices this week. Stocks in LME-approved warehouses have climbed more than 50% this week to 190,075 tonnes, according to bourse data on Friday.
Weekly data showed a 15% jump in inventories in China to 155,839 tonnes, the highest since September. MCUSTX-TOTAL CU-STX-SGH
COPPER DEFICIT: The global world refined copper market showed a deficit of 33,000 tonnes in October, down from 89,000 tonnes in September, data showed.
GRID SPEND: China’s State Grid plans to further cut investment in grid infrastructure this year by 8.8% to 408 billion yuan ($59 billion), domestic media group Caixin reported on Friday.
Grid spend accounts for about half of copper demand in China, according to Roskill.
SUPPLY: Freeport-McMoRan reported a fall in fourth-quarter copper output and said it expected higher spending in 2020 as it transitions its giant Grasberg copper mine in Indonesia to underground mining.
COLUMN: Where’s has all the metal gone? LME zinc market starved of stock.
CHINA HOLIDAY: Trading volumes were thin as China closed shops to celebrate the new year. The Shanghai Futures Exchange (ShFE) will be closed for a week from Friday.
TRADE: The United States wants to conclude a trade deal with the United Kingdom this year, U.S. Treasury Secretary Steven Mnuchin said on Friday.
OTHER PRICES: LME aluminium was bid down 0.6% to $1,785 a tonne, zinc was bid 0.2% lower at $2,339 a tonne after touching its lowest in almost three weeks, lead fell 1.1% to $1,946 a tonne and tin fell 0.8% to $16,900 a tonne.
Nickel declined 2.2% to $13,060 a tonne, its lowest since Dec. 10 and heading for a 6% weekly fall.
Reporting by Zandi Shabalala; Editing by Kirsten Donovan