As my colleague, Fouad Egbaria reported earlier this week, copper prices have been on a slide.
Reuters also reported this week that copper on the LME traded down 0.1% at $5,634 a ton in official rings today as sentiment slides for a quick recovery in top copper consumer China.
Copper is widely seen as a gauge of economic health, particularly in China, because of the dominant position it holds as both producer and consumer. Prices had dropped as low as $5,565.50, its weakest since early September and down 12% since Jan. 16, the article reports.
It is too early to gauge the true level of impact the coronavirus epidemic is having on manufacturing, as companies are closed for an extended Lunar New Year holiday, not due back now until Feb. 9 following a government-mandated extension.
But retail consumption is definitely down in what is the peak consumer week of the year, as malls, coffee shops, and cinemas are empty across China.
Previous epidemics have seen both production and consumption bounce back within months of the epidemic being contained, so the long-term impact is likely to be more limited than the current reaction suggests.
Nevertheless, the epidemic could slow Chinese growth to 5% or even lower, a government economist is quoted as saying, as authorities extended the Lunar New Year holidays and urged staff to stay home.
The copper market is in deficit and supply-side concerns have seen a period of price rises, particularly in the first quarter of last year. However, slowing global growth has been the overriding dynamic in the copper market since then and a price recovery of sorts has now been stopped dead in its tracks by the epidemic.
Copper is not alone, though: the whole base metals complex is down. Aluminum and nickel have shed earlier price gains, but while much will depend on the control of the epidemic, current levels may prove to be a low point when we look back in the second half of this year.