Metals Buckle Under Virus Double Whammy

Lockdowns imposed to control the coronavirus have battered China’s appetite for everything from coal to copper, pushing stockpiles of raw materials higher and global prices lower. The next crunch could come from supply. The risk of an outbreak is growing in ill-prepared producer countries, with mandatory quarantines and border shutdowns threatening to choke off production.

Prices of bulk commodities are already seeing some support from such disruptions, as ports and mines close. Coking coal in particular has outperformed owing in part to Mongolia’s decision in late January to seal its border with China, which cut off a key source of supply. The impact may be only short term. With factory shutdowns spreading through the U.S. and Europe, the reduction in wider metals supply would need to be dramatic to offset crumbling global demand. Upheaval could provide some price support regardless.