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METALS-Copper, aluminum slump as virus spreads, threatens demand

Eric Onstad

* Shanghai aluminum hits lowest in 41 months

* ShFE copper inventories climb to four-year high (Adds analyst comment, updates prices, adds LONDON dateline)

LONDON, March 6 (Reuters) - Prices of copper, aluminum and other industrial metals slumped on Friday as the coronavirus outbreak extended outside China, threatening to crimp economic growth and metals consumption.

As more cases pile up in the United States and elsewhere, the Asian Development Bank forecast that global financial losses could reach between $77 billion and $347 billion.

"I just wonder whether the metals market is able to fully price-in the worst impacts in terms of the economy if we are slowing sharply globally and there's the risk of recession," said independent metals consultant Robin Bhar.

"China might recover well, but what about the U.S., Europe, other parts of Asia, which could still be further impacted by the virus? There's a real threat that we have to see further lows before any sort of recovery can be seen."

Benchmark copper on the London Metal Exchange was down 0.4% at $5,654 a tonne by 1125 GMT. Prices of the metal widely used in power and construction have shed 11% since mid-January.

The most active aluminum contract on the Shanghai Futures Exchange (ShFE) touched its lowest in 41 months, dropping as much as 0.8% to 13,020 yuan ($1,872.14) a tonne.

* CHINA STOCKS: Inventories of metal in China piled up this week, underscoring persistent sluggish demand in the world's top metals consumer amid the coronavirus outbreak.

Inventories of copper in ShFE-approved warehouses <CU-TX-SGH> rose by a hefty 11.1% from the previous week to 345,126 tonnes, the highest since April 2016.

* NICKEL STOCKS: LME inventories of nickel <MNISTX-TOTAL> climbed to 236,106 tonnes, the highest since September 2018, having more than tripled since early December last year.

* USA VIRUS: The death toll from the respiratory illness rose to 12 in the United States and at least 57 new cases of coronavirus were confirmed nationwide on Thursday.

"If the virus gets a hold in the USA, the economy will slow further, major corporations will be legally obliged to issue profit warnings and potentially trigger another downward spiral," Malcolm Freeman at Kingdom Markets said in a note.

* CHINA: The virus likely halved China's growth in the first quarter compared to the previous three months, more severe than thought just three weeks ago and triggering expectations for earlier interest rate cuts, a Reuters poll showed.

* PRICES: LME aluminum fell 0.4% to $1,713 a tonne, nickel declined 0.4% to $12,840, zinc eased 0.3% to $2,005.50, lead edged up 0.1% to $1,836 and tin gave up 0.4% to $16,950.

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PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminum

Most active ShFE aluminum

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

ARBS ($1 = 6.9465 Chinese yuan) (Reporting by Mai Nguyen; Editing by Subhranshu Sahu and Vinay Dwivedi)