Copper prices stabilised close to 4-year lows on Friday as disruption to supply caused by shutdowns of mines and shipping routes began to offset the huge hit to demand from the coronavirus outbreak.
Benchmark copper was down 0.2% at $4,795 a tonne at 1700 GMT on Friday and roughly unchanged this week.
The metal used in power and construction last week saw its biggest weekly loss since 2011 – down 11% – and touched $4,371, the lowest since January 2016.
Prices have fallen more than 20% so far in 2020.
South Africa closed its ports on Thursday, disrupting shipments from countries that produce a tenth of global copper supply, while Glencore became the latest in a long list of companies to suspend or slow mining operations.
“The supply shock is something that is underestimated or underappreciated in the market,” said Julius Baer analyst Carsten Menke.
He said demand may also begin to rebound in China – which consumes half the world’s copper – as it unwinds coronavirus containment measures, and that prices should rise over the next three months.
Coronavirus is spreading rapidly in the United States and Europe, shutting down large parts of the economy, but China is slowly returning to work.
The dollar saw its biggest weekly fall in more than a decade, easing the pressure on base metals that become costlier for non-US buyers when the dollar is strong.
Stock markets fell in Europe and the United States as investors continued to fret about the impact of coronavirus.
Analysts said at the start of the week the slide in copper demand as manufacturing is disrupted by the coronavirus outbreak would fuel a surplus this year of up to a million tonnes.
Freeport-McMoRan said it was in talks with the Peruvian government to conduct limited operations at its giant Cerro Verde copper mine.
Chilean copper miner Codelco said output had dropped 5.3% in 2019 to 1.59 million tonnes.
Stocks of copper, aluminium, zinc and lead in warehouses monitored by the Shanghai Futures Exchange (ShFE) fell, with lead inventories plunging to the lowest since December 2018. Analysts said this did not necessarily mean Chinese demand for all these metals is catching up with supply.
Plummeting aluminium prices are unlikely to persuade producers to immediately cut output as input costs have also fallen, leaving the market with massive surpluses.
Chinese aluminium producer Chalco played down the impact of the coronavirus and said its output fell 9% in 2019.
LME aluminium was up 0.7% at $1,547 a tonne, zinc rose 0.7% to $1,873, nickel gained 1.4% to $11,370, lead rose 1% to $1,702.50 and tin was 0.9% higher at $14,400. All but aluminium were on course for weekly gains after large falls the previous week.
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