SHANGHAI, Feb 24 (SMM) – Shanghai base metals moved mostly lower on Monday, extending declines from last week, as a surge in the number of new coronavirus cases reported outside China over the weekend grew concerns about its impact on the global economy.
South Korea raised its coronavirus alert to the highest level, while Italy and Iran confirmed an uptick in coronavirus infections.
In China, the economic planner—National Development and Reform Commission—said on Monday that 86.3% of nonferrous metals enterprises have resumed production.
NDRC data also showed that showed more than 70% of major industrial companies in Jiangsu, Shandong, Fujian, Liaoning, Guangdong and Jiangxi provinces have restarted production, and Jiangsu reported it reached 90%.
Refuelled coronavirus fears boosted demand for safe-havens, taking US gold futures to a new seven-year peak.
On the Shanghai Futures Exchange, zinc plunged 2.9% to lead the losses, aluminium fell 0.6%, copper and lead shed 0.4%, and nickel lost more than 0.3%. Tin rose 1.2%. Base metals on the London Metal Exchange performed similarly.
China’s futures markets have suspended night trading session until further notice.
Copper: The most-traded SHFE 2004 contract slipped to its weakest in more than a week, near the 45,700 yuan/mt level, in early morning trade, before it recovered some ground to close the day 0.43% lower at 46,000 yuan/mt. SHFE copper has come under pressure from several moving averages, with KDJ indicators in a bearish bias. Whether it could remain above 45,700 yuan/mt will come under scrutiny tomorrow.
Aluminium: The most-active SHFE 2004 contract fell to a one-year low of 13,450 yuan/mt in morning trade, before it recouped some losses to close the day 0.59% lower at 13,530 yuan/mt. Recent losses have sent the contract below all near-term moving averages. SMM data showed that social inventories of primary aluminium ingots in China have almost doubled from levels seen before the Lunar New Year holiday, indicating that demand recovered slowly amid the epidemic. That would hit morale among longs, and hamper upside potential in SHFE aluminium prices in the short term. Notably, long positions on the front-month March contract reduced more than 10,000 lots on the day.
Zinc: The most-liquid SHFE 2004 contract tumbled nearly 3% to a more than three-year low of 16,570 yuan/mt shortly before the closing bell. It lost 2.87% on the day to end at 16,595 yuan/mt.
Nickel: The most-traded SHFE 2004 contract slid to a three-week low of 101,020 yuan/mt, before it rebounded somewhat on short-covering. It finished the day 0.34% weaker at 102,720 yuan/mt. Whether it could remain above 101,000 yuan/mt will come under scrutiny in the near term.
Lead: The most-liquid SHFE 2004 contract recovered losses from a lower open back to positive territory, before it eased again to end the day 0.41% weaker at 14,505 yuan/mt. The contract has fallen below the five-day moving average, but remains above the 10-day one. Lead-acid battery makers in China recovered faster than secondary lead smelters, pointing to positive fundamentals. That, coupled with backwardation on LME lead, lent support to SHFE lead.
Tin: SHFE tin continued its rally on the day, bucking the downtrend across nonferrous metals. The most-traded SHFE 2006 contract climbed to a high of 137,430 yuan/mt, its highest since January 23, before it closed the day 1.2% higher at 137,080 yuan/mt. The contract has stood above the 40-day moving average, and whether it could hold above 137,000 yuan/mt will come under scrutiny in the short run.