SMM Evening Comments (Feb 13): Shanghai base metals mostly higher as COVID-19 remained in focus

SHANGHAI, Feb 13 (SMM) – Most nonferrous metals on the SHFE closed higher on Thursday, but gains were moderate as the number of deaths and new cases form the coronavirus outbreak spiked.

Lead and nickel rose 0.4%, copper and zinc gained 0.2% while tin dipped less than 0.1% and aluminium slipped 0.4%.

The ferrous complex traded mixed. Iron ore jumped 1.6%, coke advanced 0.6%, hot-rolled coil inched up close to 0.1%, while stainless steel stayed flat after seven consecutive days of gains. Rebar shed 0.3% and coking coal fell 0.5%.  

China’s futures markets have suspended night trading session since last week until further notice.

Copper: The most-traded SHFE 2003 contract climbed to an intraday high of 45,860 yuan/mt in morning trade, before it eased to close the day 0.2% firmer at 45,710 yuan/mt. The contract is under pressure from the 10-day moving average. It is likely to struggle to surpass 46,000 yuan/mt in the absence of a breakthrough in the coronavirus crisis.

Aluminium: The SHFE 2003 contract fell for a second straight day on Thursday, losing 0.44% on the day to end at 13,705 yuan/mt. Two days of losses have taken the contract below all near-term moving averages, as delayed resumption of downstream aluminium processors weighed on investor sentiment and hampered upward momentum in prices.

Zinc: The most-liquid SHFE 2004 contract reversed an initial slip to an intraday high of 17,180 yuan/mt in morning trade, before it erased some gains to end the day 0.18% stronger at 17,120 yuan/mt. SHFE zinc appeared to see some stabilisation, after plumbing a three-year trough of 16,975 yuan/mt on Wednesday. Recovering demand deters fundamentals from deteriorating further, which will put a floor under SHFE zinc at 17,000 yuan/mt.  

Nickel: The most-traded SHFE 2004 contract hovered in a wide range to close the day 0.37% higher at 105,630 yuan/mt. It still resides around the levels seen in the previous two days. Its movement around the five-day moving average will come under scrutiny tomorrow.

Lead: The most-liquid SHFE 2004 contract recouped earlier losses to a one-week high of 14,260 yuan/mt in afternoon trade, as longs flocked in on expectations of consumption recovery in April. The contract finished the day 0.42% higher at 14,240 yuan/mt. It is likely to continue its ascent to above the 10-day moving average, if its LME counterpart strengthens tonight.

Tin: The most-traded SHFE 2006 contract crept up to an intraday high of 134,980 yuan/mt in early morning trade, before it gave back all those gains to close the day a tad weaker at 134,550 yuan/mt. Resistance is seen at 135,500 yuan/mt.