SMM Evening Comments (Mar 23): Shanghai base metals lower across the board on COVID-19 uncertainty

Published: Mar 23, 2020 18:12
SHFE nonferrous metals declined across the board on Monday, giving up gains from last Friday, as uncertainties around the economic impact of the fast-spreading coronavirus outbreak continued to depress investors’ sentiment.

SHANGHAI, Mar 23 (SMM) – SHFE nonferrous metals declined across the board on Monday, giving up gains from last Friday, as uncertainties around the economic impact of the fast-spreading coronavirus outbreak continued to depress investors’ sentiment.


SHFE aluminium led the losses with a decline of 5.22%. Copper plunged 8% to hit its “limit down” before finished 3.07% lower on the day. Zinc shed 1.75%, lead fell 0.19%, nickel lost 3.72%, and tin declined 2.14%


The ferrous complex also traded lower as iron ore slipped 5.98%. Rebar dipped 3%, hot-rolled coil went down 3.67%, stainless steel shed 1.38%, and coke ended down 1.78%. 

 

The SHFE has suspended night trading session until further notice.


Copper: The most-liquid SHFE May contract recovered after it opened at a low level of 35,480 yuan/mt, climbing to around 37000 yuan/mt and finished the session 3.07% lower at 37,200 yuan/mt. Virus panic reemerged as business activity across the Western countries wound down amid efforts to fight the spread of COVID-19. Growing expectations that the Tokyo Olympics would be delayed until next year also weighed on market sentiment. SMM expects further downside room in copper prices and support from 35,000 yuan/mt will be monitored. 


Aluminium: The most-traded SHFE May contract slumped below all moving averages and closed down 5.22% on the day at 11,345 yuan/mt. Bearish sentiment amid worsening coronavirus crisis, coupled with a lack of improvement in fundamentals, is likely to cap any rebound in aluminium prices in the near term. Resumption of downstream demand and maintenance schedule at smelters will be closely monitored. 


Zinc: The most-active SHFE May contract hovered in a narrow band and finished the day 1.75% lower at 14,630 yuan/mt. Reduced domestic social inventories of refined zinc were outweighed by virus fears, which may extend the decline in near-term zinc prices. 


Nickel: The most-liquid SHFE June contract slipped after edged up to a session high of 94100 yuan/mt, falling below 91,200 yuan/mt to end 3.72% lower on the day at 91,920 yuan/mt. SMM expects the market to remain volatile until the rollout of massive stimulus measures. Support from 90,000 yuan/mt will be monitored. 


Lead: The most-active SHFE May contract traded with support from 13,000 yuan/mt and ended the session 0.19% lower at 13,225 yuan/mt. Pressure from loaded-up bearish positions will cap any upsides in near-term prices. 

 

 

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