Prices of copper, an indicator of the global economy’s health, have plunged more than 12% this year, as a deadly coronavirus outbreak in China has led to a shutdown in the country's key manufacturing regions.
The epicentre of the outbreak is Wuhan city in Hubei province, while most of the copper semi-fabricator and aluminium downstream factories are based in Guangdong province.
As of Monday (Feb. 3) morning, at least 24 provinces, municipalities and other regions in China told businesses not to resume work before Feb. 10 at the earliest.
As of end of Monday there were a total of 425 deaths and 20,438 confirmed cases in the country.
Copper is widely used in construction and manufacturing and China is the world’s top consumer of the metal.
“In China’s key industrial sectors – construction, autos, and durable goods – demand for copper makes up around 50% of total consumption,” wrote Daniel Hynes, senior commodity strategist at ANZ Research. “Assuming a two-week shutdown, we could see demand for copper fall by levels similar to 2003′s SARS outbreak,” Hynes added.
During the Severe acute respiratory syndrome (SARS) outbreak, the Nikkei World Commodity Price Index -- which comprises 14 commodities, including petroleum products and nonferrous metals -- fell to around 61 in April from around 73 in March, before the World Health Organization issued a global alert. The index's average was 100 in 1980.
The new coronavirus has surpassed SARS in terms of confirmed cases and on Thursday (Jan. 30) the World Health Organization declared the outbreak a global public health emergency.
"The main reason for this declaration is not what is happening in China but what is happening in other countries," said WHO chief Tedros Adhanom Ghebreyesus.
Various countries have taken steps to close borders or cancel flights
Copper, has declined 9% over the past two weeks, according to IHS Markit.
What happens in China has repercussions around the world.
"Logistics is the issue… everyone relies on timely shipments from China," a trader told Argus Media.