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Aluminium, Zinc rise after multi-year lows


Industrial metals prices carved out new lows on Friday as the coronavirus outbreak worsened, but most rebounded as traders cashed in profits and squared positions ahead of the weekend.

The rapid spread of the coronavirus increased fears of a pandemic on Friday, with six countries reporting their first cases and the World Health Organization raising its global spread and impact risk alert to “very high”.

Copper and zinc touched their weakest levels in more than three years on fears the virus will erode more metals demand. “Not only do people want to get out as worries continue to escalate, but it’s also month-end. And some people may be trying to protect some of their zinc and lead positions on the downside ahead of the option expiry next week,” said Robert Montefusco at broker Sucden Financial. Mainland China, the top metals user, reported 327 new cases of the virus, the lowest since January 23.

“Downward headwinds on metals prices may persist for the near term. China’s situation is stabilising, but the downstream demand from construction hasn’t picked up sufficiently,” said Xiao Fu, head of commodity market strategy at Bank of China International. “For commodity prices, we’re seeing a double hit. One is from the risk-off sentiment and the other is from the fundamentals, the delayed restart of construction in China.”

Construction is the biggest enduser of copper globally, accounting for 28 per cent of demand, according to the International Copper Association. Benchmark three-month zinc on the London Metal Exchange fell as much as 2.1 per cent to $1,970 a tonne, its lowest since June 2016, but later erased losses, rising 0.5 per cent to $2,021.50 in final open-outcry trading.

Copper and zinc inventories in warehouses tracked by ShFE jumped to their highest in nearly three years on Friday as the coronavirus outbreak hurt demand.


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