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SMM Evening Comments (Feb 28): Shanghai base metals plunged amid pandemic fears
Feb 28, 2020 18:18CST
Source:SMM
On the SHFE, zinc collapsed 3.9% to lead the losses across nonferrous metals, tin dropped 3.1%, nickel sank 2.8%, aluminium and copper fell 2.5%, and lead lost 1.2%.

SHANGHAI, Feb 28 (SMM) – Shanghai base metals tumbled broadly on the last trading of February, amid mounting fears over the spread of the coronavirus globally. Copper and aluminium dived to three-year lows, while zinc plumbed a fresh 3-1/2-year trough.

 

Stocks and oil prices extended recent losses, with Dow Jones suffering the sharpest points-drop in history overnight and US crude prices falling for a sixth straight session to lows in more than a year on Friday.   

 

As of Wednesday February 26, capacity utilisation rates stood at 81.5% for copper smelters in China, 87.6% for aluminium smelters, and 80.2% for lead and zinc smelters, according to data from China Nonferrous Metals Industry Association, which surveyed 241 nonferrous metals firms.

The capacity utilisation rates at restarted copper and aluminium processors in China climbed to 59%, up 12.9 percentage points from a week earlier.

 

On the Shanghai Futures Exchange, zinc collapsed 3.9% to lead the losses across nonferrous metals, tin dropped 3.1%, nickel sank 2.8%, aluminium and copper fell 2.5%, and lead lost 1.2%. Meanwhile, their counterparts on the London Metal Exchange performed similarly.

 

The SHFE has suspended night trading session until further notice.

 

Copper: The most-traded SHFE 2004 contract slipped to its lowest in three years at 44,240 yuan/mt, before it closed the day at 44,390 yuan/mt to register a weekly loss of 3.5%. Whether it could remain above 44,000 yuan/mt will come under scrutiny next week.

 

Aluminium: The most-active SHFE 2004 contract fell all the way to its lowest since mid-January 2017 at 13,070 yuan/mt, before it ended at 13,110 yuan/mt to post a 3.5% weekly fall. SHFE aluminium is expected to remain weak in the short term, given its weak fundamentals.  

 

Zinc: The most-liquid SHFE 2004 contract fell below the 16,000 yuan/mt level to a trough of 15,675 yuan/mt, the lowest since June 2016, amid broad risk aversion. It later recovered some ground to close at 15,860 yuan/mt to produce a weekly fall of 6.9%, the biggest in 10 months. Weak fundamentals and prevailing risk-off sentiment are expected to keep SHFE zinc week.

 

Nickel: The most-traded SHFE 2004 contract fell below the 100,000 yuan/mt mark, sinking to its lowest since July last year at 98,200 yuan/mt before it closed at 98,250 yuan/mt. Longs trimmed their positions significantly in afternoon trade. Strength at 95,500 yuan/mt, the low end of the range where SHFE nickel hovered in May to June last year, will come under scrutiny in the near term.

 

Lead: The most-liquid SHFE 2004 contract cruised lower in afternoon trade, to its lowest in more than two weeks at 14,240 yuan/mt, before it recouped some losses to end at 14,335 yuan/mt. A temporarily positive narrative on fundamentals underpinned SHFE lead, which saw the smallest percentage decline among nonferrous metals on the day. The contract shed 2.1% on the week, after two consecutive weeks of gains.  

 

Tin: The most-traded SHFE 2006 contract returned to lows hit in early February. It fell to a more than three-week low of 131,560 yuan/mt, before it ended at 131,770 yuan/mt. 

Evening comments
Copper
Aluminium
Zinc
Nickel
Tin
Lead

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