SMM Evening Comments (Mar 13): Shanghai base metals closed mixed in virus-led rout

SHANGHAI, Mar 13 (SMM) – Shanghai base metals closed mixed on Friday, after global stock markets suffered a historic wave of selling.

Metals recovered somewhat after a plunge in early morning trade, with copper and aluminium finishing the day in the green.

On the Shanghai Futures Exchange, copper closed the day up 0.3% and aluminium gained 0.4%. Tin tumbled nearly 3% to lead the be worst performer, nickel dropped 1.1%, lead fell 0.9% and zinc slipped 0.6%.

Base metals on the London Metal Exchange extended the rally in European trading hours. The comeback was strong, with nickel jumping more than 7% on the day as of 18:30 Beijing time.  

The People's Bank of China announced on late Friday that it is cutting reserve requirement ratio (RRR) for some financial institutions by 0.5 to 1 percentage point and release 550 billion yuan in liquidity to shore up economy amid the COVID-19 outbreak, effective from March 16.

The SHFE has suspended night trading session until further notice.

Copper: The most-traded SHFE 2005 contract hit a new 40-month low of 42,740 yuan/mt in early morning trade, before it rebounded to end at 43,650 yuan/mt. The contract remains under pressure from moving averages. Whether it could hold onto the 43,000 yuan/mt level will come under scrutiny next week.

Aluminium: The most-active SHFE 2005 contract rebounded swiftly in early afternoon trade, returning above 13,000 yuan/mt, before it eased to end at 12,920 yuan/mt.

Zinc: The most-liquid SHFE 2005 contract hit an intraday low of 15,505 yuan/mt in early morning trade, before it clawed back some losses to end at 15,805 yuan/mt. The contract now sits below all near-term moving averages and is expected to trade rangebound on hopes for more stimulus measures.

Nickel: The most-traded SHFE 2006 contract slipped to a nine-month trough of 96,200 yuan/mt after kicking off the day with a lower open. It later recovered to end at 99,300 yuan/mt. Whether SHFE nickel could follow its LME counterpart higher, returning above 100,000 yuan/mt will come under scrutiny next week.

Lead: The most-liquid SHFE 2005 contract slipped to an intraday low of 14,040 yuan/mt in early morning trade, within spitting distance of a one-month low of 14,030 yuan/mt plumbed on Monday. It later recovered some ground to end at 14,150 yuan/mt. Positive fundamentals failed to help SHFE lead weather the broad decline.  

Tin: The most-traded SHFE 2006 contract fell to its lowest since July 2016 at 126,830 yuan/mt in morning trade. It later recovered to end at 129,800 yuan/mt, to produce a weekly decline of 4.3%, the biggest in seven months. Support is seen at 126,500 yuan/mt.