Industrial metals: The clouds are getting darker again

by David Fleschen

The general conditions have deteriorated: weak economic data on both sides of the Atlantic last week and increasing tensions between the USA and China due to the corona virus are depressing the mood of market participants and metal prices. After the LME industrial metals index had already dropped noticeably at the end of last week, the metals are all starting the new trading week with negative signs. Copper falls below $ 5,100 a ton, aluminum continues to drop to $ 1,475 a ton and zinc is trading at the $ 1,900 a ton mark.
In the view of experts, the data due for release this week will not help prices to recover quickly. On the contrary, the Chinese trade balance, for example, is likely to show weak exports from China, since the corona virus had many countries around the globe firmly under control in April and numerous lockdown measures were taken in them. In addition, the cuts in copper production in Chile, for example, do not appear to be as severe as initially assumed. According to data from the Chilean statistical institute INE, copper production in March rose by 4.2% compared to the previous year. And the Chilean copper commission expects that measures to combat the coronavirus could only lose around 1% of annual production. Chile produced 5.8 million tons of copper last year. So that means there is still plenty of supply, not just copper, while in most countries outside of China, demand is still at the bottom.

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