China's coronavirus outbreak and lockdowns across the country have led to the prolonged closure of Chinese businesses, triggering concerns amongst banks and traders that letter of credit (L/C) obligations may not be met.

Traders are also concerned that L/Cs may not be opened in time to unload shipments promptly.

Copper concerns

Concerns expressed by participants in the copper market may be typical of worries across several sectors.

Copper traders and producers with shipments set to arrive in China in February say they are concerned about possible delays and difficulties obtaining guarantees that L/Cs would be opened in time for swift unloading at destination ports.

Supply chain disruption

Disruptions through the supply chain may well have a negative impact in several markets.

The net result of such disruptions may well deter investors in commodities, thus pushing prices down. The London Metal Exchange's three-month copper price is down by around 12 per cent since January.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.