SMM Evening Comments (Feb 21): Shanghai base metals mostly lower on renewed virus fears; copper fell to 1-week low

Published: Feb 21, 2020 18:31
Shanghai base metals cruised mostly lower on Friday, as a spike in new cases from the coronavirus epidemic in South Korea refuelled investor anxiety

SHANGHAI, Feb 21 (SMM) – Shanghai base metals cruised mostly lower on Friday, as a spike in new cases from the coronavirus epidemic in South Korea refuelled investor anxiety.

 

South Korea reported 52 new cases of coronavirus on Friday, taking up the national total to 156, making it the worst-infected country outside of China. That renewed concern the infection is spreading in South Korea, Singapore and other Asian economies.

 

Mounting risk aversion boosted demand for safe-havens, with US gold futures hitting seven-year highs.

 

On the Shanghai Futures Exchange, lead shed 1.5% to lead the losses, copper fell 0.9%, zinc and aluminium declined 0.7%, while tin gained 0.3% and lead rose 0.9%. Their counterparts on the London Metal Exchange, meanwhile, turned lower across the board.

 

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

 

Copper: The most-traded SHFE 2004 contract plunged in afternoon trade, falling below 46,000 yuan/mt to a one-week low of 45,980 yuan/mt. It finished the day 0.86% lower at 45,990 yuan/mt, erasing earlier gains to register a weekly loss of 0.28%. SHFE copper now sits below the five-day moving average, with KDJ indicators shaping a death cross. Whether it could remain above 45,900 yuan/mt will come under scrutiny next week.

 

Aluminium: The most-active SHFE 2004 contract extended its decline, losing 0.69% on the day to end at 13,580 yuan/mt, its lowest close since February 4.

 

Zinc: The most-liquid SHFE 2004 contract slipped to its lowest in more than a week at 17,020 yuan/mt, as a jump in China zinc inventories prompted shorts to flock to the market. The contract finished the trading day 0.73% lower at 17,030 yuan/mt. Uncertainty around consumption recovery and concerns about oversupply is likely to keep SHFE zinc at lows in the short term.

 

Nickel: The most-traded SHFE 2004 contract weakened on the buildup of short positions, falling to its lowest in more than two weeks at 102,330 yuan/mt before it ended the day 1.49% lower at 102,350 yuan/mt, further away from the five-day moving average. SHFE nickel is expected to remain weak in the near term, and support at 102,000 yuan/mt will come under scrutiny.

 

Lead: The most-liquid SHFE 2004 contract resumed its rally, and bullish funds lifted it to a three-week high of 14,670 yuan/mt, shortly before it closed the day 0.93% higher at 14,640 yuan/mt. SHFE lead shrugged off resistance at the 20-day moving average to post a second straight week of gains, underpinned by a wide backwardation on LME lead, recovering consumption in China and an unlikely recovery of secondary lead supply in the short term.

 

Tin: The most-traded SHFE 2006 contract recovered from earlier losses to close at its highest since the market reopened after the Lunar New Year holiday at 136,100 yuan/mt, gaining 0.3% on the day. SHFE tin is supported by the 10-day moving average, while resistance is seen at 136,200 yuan/mt.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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