Nine consecutive down days in London saw copper losing 9% in value, falling to a more than 3-month low to $5,715 a tonne. On the LME, copper suffered its longest losing streak in six years.
The Beijing’s response to the outbreak could be significant.
The Chinese government 6% growth target for 2019 is likely non-negotiable in order to meet the doubling of per capita GDP promised by President Xi in 2020 versus 2010. And with consumption weaker, this will likely involve more fixed asset investment-heavy government spending.
As a result, it may see another push into infrastructure projects into mid-year, while property restrictions could be further eased.
For metals commodity demand, it see a slightly weaker Feb-March than may have been anticipated, but limited changes to expectations for the year as a whole.
On the technical front, from the recent highs in the $6330 area copper has lost about 9%, now being in the $5720 area. The support band represented by the lows at the beginning/end of September at $5550$-5600$ is very close to current prices.
A possible return to these levels is not excluded in the coming days. However, when the “coronavirus” issue starts to ease, prices will be able to catch up, returning to normal ($6000 in the first instance). It should also be noted that the MACD indicator (on a weekly basis) is in positive divergence, suggesting a slowdown from the 2018 highs.