SMM Evening Comments (Apr 1): Shanghai base metals mostly gave up gains on Wednesday

SHANGHAI, Apr 1 (SMM) – SHFE nonferrous metals, except for tin, relinquished the increase from the previous day, with lead leading the losses and ending down 1.51%. 

Copper shed 0.76%, aluminum slipped 1.21%, zinc lost 0.3%, nickel eased 0.15%, while tin climbed 1.17%. 

The ferrous complex also traded lower for the most part as iron ore lost 2.71%, rebar fell 2.34%, hot-rolled coil dipped 2.94%, coke shed 4.81%, while stainless steel added 0.08%.  

A Caixin survey on Wednesday showed that Chinese manufacturing activity expanded slightly in March, with the Caixin/Markit manufacturing purchasing managers’ index (PMI) for March standing at 50.1. Factory activities in February suffered the sharpest contraction on record with the PMI at 40.3.

Global crude oil prices extended decline on Wednesday, following their biggest-ever quarterly losses, as a bigger-than-expected buildup in US inventories and a widening rift within OPEC reinforced fears of oversupply. 

Copper: The most-liquid SHFE May contract failed to hold onto gains from the previous day as steep declines in oil prices dampened market sentiment, dragged the contract to a session low of 38,860 yuan/mt and sent it down 0.76% to end at 39,000 yuan/mt. Rising coronavirus cases in the US also sparked demand concerns and weighed on prices of the red metal. Limited morale of bullish positions may keep the contract struggling below 40,000 yuan/mt. 

Aluminium: The most-active SHFE June contract weakened as investors loaded up their short positions, which ended the contract 1.21% lower on the day at 11,445 yuan/mt. Aluminium processing companies in China showed growing concerns about the export orders in April-May. SMM statistics indicated that China’s exports of unwrought aluminium and other aluminium-containing products accounted for 24% of the total consumption of Chinese aluminium. Expectations of infrastructure demand may support orders for wire, cable and construction materials. 

Zinc: The most-active May contract declined on loaded-up shorts, before support from the 10-day moving average halted its decline at 15,080 yuan/mt, and ended it at 15,140 yuan/mt, down 0.3% on the day. Continued weak demand will offer little upward momentum in zinc prices, while the market still anticipated supportive fiscal policy from the government.

Nickel: The most-liquid SHFE June contract extended its rangebound trend between 91,000-94,000 yuan/mt, which has continued for the past two weeks. It ended the day 0.15% lower at 92,680 yuan/mt. 

Lead: The most-traded SHFE May contract fell on heavy pressure from 14,000 yuan/mt, losing 1.51% on the day and ending at 13,680 yuan/mt. This may put a pause on its previous round of increase over almost the past two weeks. 

Tin: The most-active SHFE June contract recovered losses as short-covering lifted it to a session high of 122,780 yuan/mt, before it trimmed some increases and ended up 1.17% on the day at 121,290 yuan/mt. It is expected to test pressure from 123,000 yuan/mt with support from 118,000-120,000 yuan/mt.