SMM Evening Comments (Mar 17): Shanghai base metals extended losses as coronavirus crisis continued

SHANGHAI, Mar 17 (SMM) – SHFE nonferrous metals fell across the board on Tuesday, extending declines on Monday after Wall Street suffered massive losses amid panic over the economic impact from the coronavirus outbreak.

SHFE tin led the declines and closed down 3.3%. Copper shed 1.41%, aluminum fell 1.05%, zinc slipped 0.35%, nickel eased 0.5%, and lead dipped 2.9%.

The ferrous complex mostly failed to extend the increase from the previous day, as rebar lost 0.2%, hot-rolled coil dropped 0.71%, stainless steel fell 0.65%, coke shed 0.27%, while iron ore added 0.9%. 

The SHFE announced on March 17 that the futures delivery of base metals, rebar, wire rod, hot-rolled coil, stainless steel, gold, silver and some other items will be free of service charges between April 10 and January 8, 2021. The stimulus measures barely supported base metal prices. 

The SHFE has suspended night trading session until further notice.

Copper: The most-liquid SHFE May contract extended decline from the prior session as it hit a fresh three-year low of 42,230 yuan/mt before ending down 1.41% on the day at 42,630 yuan/mt. The contract has slipped for the fifth consecutive session as the fast-spreading COVID-19 pandemic fueled fears of an impending recession. It is expected to test support from 42,000 yuan/mt. 

Aluminium: The most-traded SHFE May contract fell to an intraday low of 12,700 yuan/mt and pared some losses to finish at 12,740 yuan/mt, 1.05% lower on the day. The bottleneck in the resumption of demand from downstream processors kept aluminium prices under pressure. The market is awaiting more supportive policies from the government to lift the market. 

Zinc: The most-active SHFE May contract traded sideways at low levels as it pulled back after climbing to the five-day moving average, ending down 0.35% on the day at 15,660 yuan/mt. An escalation of virus development overseas may grow downside risks of base metals in the near term, while faded virus impact in China underpins prices. 

Nickel: The most-liquid SHFE June contract consolidated around 100,000 yuan/mt, with an intraday high of 100,250 yuan/mt, and closed 0.5% lower on the day at 99,550 yuan/mt. The rangebound trend may continue on Wednesday. 

Lead: The most-active SHFE May contract broke down 14,000 yuan/mt amid loaded-up shorts, closing down 2.9% on the day at 13,720 yuan/mt. As LME lead also weakened, intensified bearish sentiment may expand downside room of lead prices. 

Tin: The most-liquid SHFE June contract fell to the lowest level since September 2016, at 123,010 yuan/mt, before it trimmed some losses and ended at 123,510 yuan/mt. down 3.3% on the day. It remained below all moving averages, with support expected from 123,000 yuan/mt, or 121,500 yuan/mt in the near term.