Copper slides to three-year low

London: Copper prices tumbled to their lowest level in more than three years on Monday following a plunge in oil prices, but they came off their lows as investors counted on major stimulus from China.

Oil prices dropped by as much as a third and global stock markets were also battered after Saudi Arabia launched a price war with Russia, jolting investors already worried about the coronavirus outbreak.

Energy is a major component in mining costs, so lower oil prices undermine the pricing structure of metals. Threemonth copper on the London Metal Exchange (LME) fell as much as 3.1 per cent to $5,433 a tonne, its lowest since December 2016, but later recouped some losses. It failed to trade in official open-outcry activity, but was bid down 2.1 per cent at $5,492. A wave of selling in copper did not materialise even though it broke below a key technical area between $5,450 and $5,500, said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. “We are looking at a line in the sand that has held for three years and so far we haven't really seen any major appetite for accelerated selling below that point,” he said. “Half of demand comes from China and there are increased expectations that some kind of bazooka will be released in order to stabilise growth and it seems the market is holding on to that belief.”