* Premium for cash over three-month lead contract jumps
* Premium hit nine-year high of $68 a tonne on Tuesday (Adds closing prices)
By Pratima Desai
LONDON, Feb 19 (Reuters) - Copper prices steadied on Wednesday near three-week highs as top consumer China announced further measures to help shore up growth hit by the coronavirus outbreak, but concern about the eventual damage to the economy capped gains.
Benchmark copper on the London Metal Exchange ended little changed at $5,770 a tonne, down around 9% since the middle of January.
Prices of the metal used as a gauge of global economic health hit $5,828.50 on Monday, the highest since Jan. 27.
“Nobody knows how long the global and Chinese economy will feel the negative effects of the coronavirus,” Quantitative Commodity Research analyst Peter Fertig said. “Apple has shown what the impact of the virus on global supply chains could be.”
APPLE: Apple warned this week it was unlikely to meet its March quarter sales forecast set just three weeks ago.
Manufacturing facilities in China that produce Apple’s iPhone and other electronics have begun to reopen, but they are ramping up more slowly than expected, Apple said. MEASURES: Firms in China’s virus epicentre of Hubei province will not have to pay pensions, jobless and work-injury insurance until June.
“Metal prices seem to be holding up on hopes that the worst of the crisis is over and that Chinese efforts to stimulate the economy will frontload demand into the second half of the year, ED&F Man analyst Edward Meir said in a note. “Both of these assumptions are a bit of a stretch at the moment.”
China’s commercial hub of Shanghai has also compiled a list of firms eligible for subsidised loans to ease the impact of the outbreak. STOCKS: In a sign of stalled activity in China’s manufacturing sector, base metal stocks in warehouses monitored by the Shanghai Futures Exchange (ShFE) are rising.
Copper stocks, at more than 262,000 tonnes, are at their highest since mid-March and nearly double the level on Jan. 19.
“ShFE stocks are expected to continue to build more sharply than normal,” analysts at Citi said in a note.
SPREADS: The premium for the cash over the three-month lead CMPB0-3 closed at a nine-year high of $68 a tonne on Tuesday due to worries about nearby supplies on the LME market. It was around $50 a tonne on Wednesday.
These worries are fuelled by large holdings of warrants and cash and tom/next contracts <0#LME-WHT>. Reinforcing that are stocks of the battery metal in LME-approved warehouses near historical lows of 66,725 tonnes MPBSTX-TOTAL.
Three-month lead was down 0.8% at $1,883 a tonne.
OTHER METALS: Aluminium was flat at $1,720, zinc fell 0.8% to $2,128, tin gained 0.1% to $16,525 and nickel was little changed at $12,825. (Reporting by Pratima Desai; Editing by Shounak Dasgupta and David Evans)