Copper prices hit a three-week high this morning as China, the world’s largest copper consumer, lowered a key interest rate to cushion the impact from the coronavirus outbreak. China’s central bank lowered the rate on a one-year medium-term lending facility (MLF) loans. Policymakers said on Saturday Chinese lenders will tolerate a higher level of bad loans to support firms hit by the coronavirus epidemic.
Copper gapped down 14 percent from its January 16th high after the coronavirus spread throughout the Middle Kingdom. The metal is about 5 percent off its Feb 3rd low and still has lots of work to fill the January 26th gap down. We believe copper prices will remain depressed until there is more clarity on the coronavirus, which could be weeks or months.