SMM Evening Comments (Mar 16): Shanghai base metals mostly fell on dire China data

SHANGHAI, Mar 16 (SMM) – SHFE nonferrous metals closed mostly lower on Monday as downbeat industrial data from China and emergency interest rate cut from the US Federal Reserve underscored the potentially crippling blow of the coronavirus pandemic to the global economy. 

SHFE tin led the declines with a drop of 1.58%, copper shed 1.55%, aluminium dipped 0.35%, zinc slipped 0.86%, while lead recovered 0.25%, and nickel gained 1.48%. 

The ferrous complex, meanwhile, traded mostly higher on bullish prospects for the resumption of domestic demand for construction steel. Iron ore added 0.53%, rebar rose 1.2%, hot-rolled coil increased 0.63%, stainless steel climbed 0.91%, and coke went up 0.57%. 

China’s industrial output declined 13.5% in the January-February period from a year earlier, compared with December's 6.9% increase, the National Bureau of Statistics said Monday.

The SHFE has suspended night trading session until further notice.

Copper: The most-liquid SHFE May contract failed to hold firm above 43,500 yuan/mt as investors risk aversion intensified on concerns about the speed and scale of the virus' spread in European countries. The contract closed down 1.55% on the day at 42,630 yuan/mt, with the intraday low 42,600 yuan/mt close to the lowest level over the past three years. Support from 42,600 yuan/mt will be monitored. The SHFE March contract finished its last trading day today, with the settlement price of 43,080 yuan/mt. A total of 113,050 mt of cargoes were delivered. 

Aluminium: The most-active SHFE May contract relinquished gains from the previous session as it slipped to an intraday low of 12,795 yuan/mt and closed 0.35% lower on the day at 12,820 yuan/mt. Primary aluminium inventories continued to build up over the weekend, and the inventory pressure may keep near-term aluminium prices under pressure. The SHFE March contract was delivered today with the settlement price of 12,710 yuan/mt and the delivery volume of 98,050 mt. 

Zinc: The most-traded SHFE contract lost 0.86% on the day and finished at 15,540 yuan/mt. As investors added their short positions, open interest increased 4,232 lots on Monday to 104,000 lots. Virus fears may keep zinc prices weak in the near term.  

Nickel: The most-liquid SHFE June contract found support from 99,000 yuan/mt, recovering 1.48% to finish the day at 99,400 yuan/mt, as the news that the Philippines will ban vessels from entering Surigao del Norte from March 18 to the end of the month spurred concerns about nickel ore supply. The contract is expected to extend its rangebound trend in a broad band this week, and support from the Bollinger lower band will be monitored. 

Lead: The most-liquid SHFE May contract stemmed its decline from the previous week as short-covering lifted it to a session high of 14,210 yuan/mt before it closed up 0.25% on the day at 14,185 yuan/mt. Weak LME lead and continued pressure from bearish positions may cap the price rally.

Tin: The most-active SHFE June contract extended slide from the prior session on the back of loaded-up shorts. It dipped to an intraday low of 126,000 yuan/mt and pared some losses to close at 127,140 yuan/mt. Support below is seen from 126,000 yuan/mt.