The Post-Virus Recovery Will Be Copper-Bottomed
The industrial metal is on a record losing streak. Look for a sharp rebound once China’s inevitable stimulus efforts kick in.
Electric cars use four times as much copper as conventional ones.
Photographer: Qilai Shen/Bloomberg
China’s paralyzed factories, hobbled refineries and quarantined consumers have dragged copper through a record 14-day losing streak. The red metal looks to have further to fall: The spread of the virus may not slow for weeks, and production lines could easily remain shuttered beyond Feb. 9. But when convalescence comes, it’s the commodity most likely to benefit.
While there’s no certainty over which levers Beijing will pull to get the economy moving again, hefty stimulus is inevitable. The government, after all, has a target of doubling the size of the economy this year compared to 2010. The good news for copper is that almost any combination of measures will include a boost in demand for a metal used in power, manufacturing and consumer goods.