Industrial metals: Prices are already falling again
by David Fleschen
The calm phase on the metal markets didn't last for a long time. Already in the afternoon worries and fears about the corona virus gained the upper hand again and sent the metal prices down again. The price decline continues this morning, probably also due to the weak equity markets in Asia, which express the high risk aversion of market participants. Copper fell to a 5-month low of $ 5,560 a ton, while zinc was the lowest since mid-2016 at $ 2,180. As we recently noted here, we believe that the drop in the price of metals is exaggerating. From a technical point of view, copper is now even oversold. As long as the corona virus is still spreading, so it still has the markets under control, prices are likely to continue to fall.
The Chilean copper commission Cochilco has reported twice on the copper market in the past few days. She sees the price decline in the wake of the corona virus as an exaggeration, so the investors overreacted. The impact of the virus on copper demand cannot yet be estimated. Previously, Cochilco had expressed the expectation that Chilean copper production would hardly recover from its decline last year and would largely remain at 5.8 million tons this year. The mine producers would therefore struggle with declining metal contents in the ores and with water shortages. The 6 million tonne mark is to be exceeded in 2022.
Source: Commerzbank Research, Photo: Fotolia