Market and product

Copper prices rose on Thursday, driven by concerns about a potential supply shortage of refined metals due to transport restrictions in China aimed at containing a virus outbreak.

Three-month copper on the London Metal Exchange (LME) rose as much as 1.6% to $5,813.50 a tonne, the highest since Jan. 27. The contract pared some gains to trade 0.7% higher at $5,762.50 a tonne by 0755 GMT.

LME aluminium rose 0.3% to $1,722.50 a tonne and zinc increased 0.3% to $2,220 a tonne. "Not only is the demand side impacted, but also the supply side.

If the outbreak situation does not improve, some smelters may consider cutting production," said a China-based metals analyst.

China's February refined copper output could fall by more than 15% month-on-month, while zinc production could also drop if transport restrictions are not eased soon, said research house Antaike, adding that nickel output in January fell 33.4% from a month earlier. Some ports in China are congested with less working labour amid the outbreak.

China's move to cut import tariffs on U.S. goods also boosted sentiment. The most-traded copper contract on the Shanghai Futures Exchange closed up 1.4% at 46,040 yuan ($6,603.94) a tonne, while aluminium advanced 0.4% to 13,670 yuan a tonne and zinc edged up 0.2% to 17,335 yuan a tonne.

"All my previously booked vessels out of China have to be postponed," said a base metals trader based in Singapore. "Nothing can be guaranteed now, even the new shipment schedule. I am not the only one getting affected."

However, the trader warned that the price rally might not last as downstream users cutting output due to supply shortage could hurt economic growth, citing Hyundai Motor's production suspension in South Korea as an example.

FUNDAMENTALS

* TOLL: Another 73 people on the Chinese mainland died due to the coronavirus outbreak, the highest daily increase, taking the total death toll from the virus to 563. * SCRAP: China issued import quotas for another 4,620 tonnes of high-grade copper scrap and 1,440 tonnes of aluminium scrap for use in 2020. - Reuters-