Beckett Bronze produces cast bronze precision-machined parts and continuous cast bars. Castings are manufactured at the East 20th Street plant. The West 23rd Street plant produces finished machined parts and has about 75 machine tools including CNC lathes.
Copper prices dropped Monday, posting a fresh multiyear low, with the coronavirus pandemic damaging demand for raw materials and changing the way business is conducted on one of the world’s biggest metals exchanges.
Front-month copper futures ended the day down 3.2% at $2.1195 a pound on the New York Mercantile Exchange, closing at their lowest level since October 2016. The declines echoed a selloff in the industrial metal on the London Metal Exchange, which closed its Ring—where traders assemble in a circle to buy and sell metal—for the first time since World War II as part of the U.K.’s efforts to slow the spread of Covid-19.
Monday’s loss extended copper’s decline for the month to 17%, and analysts said prices would have fallen further if miners such as Freeport-McMoRan Inc. FCX 29.31% hadn’t closed some production and put new projects on pause. In another sign of the pressure facing metals producers, Freeport said Monday it is suspending its first-quarter dividend to shareholders.
The drop in copper prices is a potentially dangerous signal for the world economy, since the metal’s use in infrastructure, manufacturing and electrical wiring makes it a barometer for global growth. Prices are likely to come under more pressure as production in metal-intensive industries slows down and consumers avoid buying appliances such as air-conditioning units.
“The consumer’s not going to buy the washing machine because they don’t have the money or they’re insecure about whether they’re going to have the money,” said Eleni Joannides, a copper analyst at Wood Mackenzie, a consultancy. Copper production is now sure to exceed consumption this year, she said, leading to a buildup in supplies and weighing on prices.
The closure of the LME’s Ring, which originated as a circle drawn with sawdust in the early 19th century and where traders buy and sell metals using arcane hand gestures, likely added to the pressure on prices Monday.
Around 85%-90% of metals trading in London already takes place on the LME’s electronic LMEselect system and over the telephone, but the Ring plays an important role in setting official prices that are used as benchmarks throughout the metals industry. As of Monday, all official prices will be set electronically for the first time in the exchange’s 143-year history.
The Ring also plays a key role in allowing industrial users of the metal, as opposed to hedge funds and other investors, to hedge positions on specific future dates. The LME told members last week that its temporary closure could lead to short-term market disruption.
“People are concerned—it’s quite an unprecedented switch,” said Tom Mulqueen, head of research at Amalgamated Metal Trading Ltd., one of the Category 1 LME members that normally trade in the Ring. “There’s a lot of uncertainty about exactly how it will work.”
A downturn in the auto industry, which accounts for around 7% of global copper consumption, would deal a particular blow to metal markets. Detroit car companies have agreed to shut down factories in the U.S., Mexico and Canada temporarily. In Europe, most car plants have closed to protect workers from contracting Covid-19.
One potential bright spot for the copper market is China, which accounts for just under half of global copper demand and where business is slowly getting back up to speed after widespread lockdowns earlier in 2020. However, much of the copper that China buys is then re-exported to end consumers elsewhere, meaning Chinese demand isn’t immune to economic disruption in the U.S. and Europe.
Another pain point for metal markets is the energy industry, which is slashing investment in metal-intensive projects after a historic crash in prices. French giant Total SA plans to cut spending on oil-and-gas exploration by $2.5 billion, The Wall Street Journal reported Sunday.
The fall in oil prices, coupled with the strong dollar, is also pushing down production costs for miners. This could forestall further output cuts, which in turn could lead to an eventual recovery in prices, according to Citigroup analyst Maximilian Layton.
U.S. crude oil closed up 3.2% at $23.36 a barrel Monday, remaining near last week’s 18-year low, with fuel demand crumbling and a price war between Saudi Arabia and Russia threatening to flood global energy markets.
Elsewhere in commodities, front-month gold futures rose 5.6% to $1,567 a troy ounce, trimming some of their recent slide, with investors favoring havens again. The rise marked gold’s best day in a decade. Prices are still 6.4% below a peak hit two weeks ago after investors sold bullion in previous sessions to raise cash.
—Amrith Ramkumar contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com
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