LONDON- Aluminium prices slipped to their lowest level in more than four years on Wednesday as sliding demand due to the new coronavirus and expectations of a large surplus this year were reinforced by rising stocks.

Benchmark aluminium on the London Metal Exchange was down 1.2% at $1,459.5 a tonne in official rings, a drop of 20% since Jan. 22. Prices of the metal used in the transport and packaging earlier touched $1,457.50 a tonne, the lowest since Jan. 2016.

"Aluminium has some of the worst fundamentals in the base complex, the longer the lockdowns, the worse it looks," a fund manager said. "Surpluses are already expected, the numbers are bound to be revised up."

CORONAVIRUS: The number of confirmed infections of the novel coronavirus exceeded 1.38 million globally and the death toll passed 81,400, according to the latest Reuters tally. 

DEMAND: Analysts expect aluminium demand to shrink this year after years of growth, while production keeps growing, leaving the market in surplus by millions of tonnes. 

"The aluminium market is expected to shift into a 2.7 million tonnes surplus in 2020 on our projected 6.2% global demand decline," Citi analysts said in a note.

"As such, more cuts are needed to rebalance the market, and such cuts will likely be triggered by a near-term plunge of LME prices to $1,450 a tonne and persistently low average prices at around $1600 a tonne for the rest of the year."

AUTOS: Much of the drop in demand can be attributed to the auto sector where sales and production have slumped. 

Rating agency Moody's said on Tuesday that auto sales in Western Europe would continue to plunge in the third quarter, with more modest declines in Japan, before demand recovery in the fourth quarter.

STOCKS: Aluminium inventories in LME-registered warehouses, at 1.23 million tonnes, are up 25% since the middle of March and their highest since Feb. 12. Traders expect to see higher numbers over coming weeks.

SPREADS: The discount for the cash over the three-month aluminium contract widened to $37.5 a tonne on Tuesday, a level last seen in Sept. 2018, suggesting traders expect a glut of metal.

CHINA: Industrial metals markets are watching economic activity in China, the world's largest consumer of industrial metals, for clues to supply and demand.

China's new bank loans are expected to have rebounded in March from a sharp drop in February, a Reuters poll showed, as policymakers continue to urge lenders to help cash-strapped companies hit hard by the coronavirus crisis. 

OTHER METALS: Copper fell 0.8% to $5,000.5 a tonne; zinc was down 1% at $1,904; lead slid 1.3% to $1,713; tinwas down 0.1% at $14,608; and nickel gained 0.2% to $11,497.

(Reporting by Pratima Desai; Editing by Kirsten Donovan and Pravin Char) ((pratima.desai@thomsonreuters.com; +44 207 542 5113))