SMM Evening Comments (Jun 15): SHFE base metals closed mostly lower on worries about second wave of coronavirus

SHANGHAI, Jun 15 (SMM) – Nonferrous metals got off to a bad start in the third week of June as concerns over a resurgence of the coronavirus dented investor sentiment.

Metals on the SHFE, except for aluminium, closed lower on Monday, while their counterparts on the LME were lower across the board as of 18:48 Beijing time.

SHFE tin sank 1.3% to lead the way down, nickel dropped 1.2%, copper fell 0.9%, zinc shed 0.6% and lead lost 0.5%, while aluminium gained 0.3%.

China’s capital city—Beijing—recorded dozens of new cases of the novel coronavirus in recent days, all linked to a major wholesale food market, while several US states have reported a record increase in new coronavirus cases and hospitalizations.

Meanwhile, Chinese economic data for May released Monday missed expectations. Industrial production in the country for that month rose 4.4% year-on-year, less than expectations of a 5% increase. Retail sales declined 2.8% year-on-year in May, worse than expectations of a 2% decrease. Fixed-asset investment declined 6.3% in the first five months, versus a forecast 6% drop.

Copper: The most-traded SHFE contract saw its losses accelerating in afternoon trade, plumbing a session low of 46,250 yuan/mt before closing down 0.88% at 46,280.

The SHFE June contract settled at 47,050 yuan/mt on its last trading day, and 41,375 mt of copper was delivered. Its premiums over the July contract exceeded 500 in morning trade, as a short squeeze prompted bears to trim positions.

Aluminium: The most-liquid SHFE contract rebounded after slumping to a session-low of 13,490 yuan/mt in early morning trade due to the unwin/ding of more than 500 lots of long positions in five minutes, and closed 0.26% firmer at 13,605. SMM data showed that social inventories of primary aluminium ingots continued to trend lower over the weekend, but a slowdown in the trend will limit upside potential in aluminium prices tonight.

The SHFE June contract wrapped up its last trading day at 13,830 yuan/mt, with 18,300 mt of cargoes delivered.

Zinc: The load-up of short positions sent the most-active SHFE contract to a session-low of 16,230 yuan/mt, within striking distance of the two-week trough of 16,215 plumbed Friday, in early morning trade. The contract later clawed back some losses to close down 0.55% at 16,285 as shorts took profits. Whether it could remain above the lower Bollinger band will come under scrutiny tonight, as another decline in China’s zinc social inventories over the weekend and slow recovery of mines offer support.

The SHFE June contract settled at 16,370 yuan/mt.

Nickel: The most-traded SHFE contract plumbed a fresh two-week low of 100,220 yuan/mt, shortly before it closed down 1.22% at 100,290.

The SHFE June contract finished its last trading day with a settlement price of 100,720 yuan/mt.

Lead: The most-active SHFE contract shed 0.46% to end at 14,080 yuan/mt, its lowest close since May 22. It is unlikely to recover substantially tonight as its LME counterpart has extended its losses.  

The SHFE June contract finished its last trading day with a settlement price of 14,100, and 9,825 mt of lead was delivered.  

Tin: The exodus of longs knocked the most-active SHFE contract to its lowest in more than a week at 134,460 yuan/mt, before the contract ended down 1.33% at 134,730. It has fallen to the 20-day moving average, with support seen at 133,000.

The SHFE June contract settled at 137,620 yuan/mt to wrap up its last trading day.