SMM Evening Comments (Apr 24): Shanghai base metals closed mixed as investors monitored coronavirus, economic data and oil prices

Published: Apr 24, 2020 18:36
SHFE base metals closed mixed on Friday, as traders monitored fresh economic data and digested a report that raised doubts over a possible coronavirus treatment. Tin added 1.2%, nickel rose 0.8%, copper gained 0.2%, while zinc edged down 0.03%, and aluminiums shed 0.2%. Lead closed flat.

SHANGHAI, Apr 24 (SMM) – SHFE base metals closed mixed on Friday, as traders monitored fresh economic data and digested a report that raised doubts over a possible coronavirus treatment.

 

Tin added 1.2%, nickel rose 0.8%, copper gained 0.2%, while zinc edged down 0.03%, and aluminiums shed 0.2%. Lead closed flat. The SHFE will keep its night trading session suspended until May 6.

 

Following crude's rollercoaster ride, SHFE base metals wrapped up this week in mixed territories. Their counterparts on the LME were also mixed as of 18:24 Beijing time.

 

Market sentiment took a hit after an overnight report by the Financial Times, citing documents accidentally published by the WHO, said that drug remdesivir from Gilead had failed to improve patients’ conditions.

 

Grim economic data also dampened sentiment. A report from the UK’s Office for National Statistics (ONS) Friday revealed that British retail sales had fallen at the fastest rate on record in March.

 

Preliminary PMIs for April published on Thursday showed that business activity in the US and eurozone plumbed new record lows, while a separate report from the US Labour Department revealed that all of the job gains since the Great Recession have been wiped out in just five weeks.

 

The US dollar index, which tracks the greenback against a basket of its peers, held near more than two-week highs, while oil prices continued their comeback from a recent slump, with international benchmark Brent crude futures rising above $26 per barrel in Asian trading hours.

 

Copper: The most-liquid SHFE June contract opened higher and fluctuated to finish the day 0.17% higher at 41,780 yuan/mt, to produce a weekly loss of 1.18%, marking the first decline in five weeks. The contract struggled to break through the 42,000 mark, as bulls lacked confidence at highs.

Copper stocks at SHFE-approved warehouses dropped more than 44,000 mt this week to 259,037 mt as of April 24, showed data from the bourse.

MMG said on Friday that copper concentrate shipments from the site of its Las Bambas operations in Peru to the port could restart "as soon as next week." This came a day after Peruvian President Martin Vizcarra extended the country's state of emergency declared over the coronavirus outbreak until May 10.

 

Aluminium: The most-traded SHFE June contract climbed, recouping losses from a weak open to end the day 0.2% weaker at 12,285 yuan/mt. It shed 1.01% on the week, after a jump of 4.77% in the prior week, which was the biggest percentage weekly gain since August 2017 for SHFE aluminium.

Aluminium stocks at SHFE-approved warehouses declined over 27,000 mt this week to 458,403 mt as of April 24, showed data from the bourse.

Alcoa Corporation announced Wednesday that it will close its Intalco Works aluminum smelter near Ferndale amid declining market conditions, laying off 700 employees.

 

Zinc: The buildup of long positions helped the most-traded SHFE June contract claw back the majority of losses from a low open to close the day a tad weaker at 15,825 yuan/mt. The contract shed 1.89% on the week, after four consecutive weeks of gains. Concerns over ore supply are expected to continue to support market sentiment as lockdowns in some countries have been extended. SMM data showed that social inventories of zinc ingots fell sharply this week, widening backwardation on SHFE zinc.

Zinc stocks at SHFE-approved warehouses fell nearly 14,000 mt this week to 133,349 mt as of April 24, showed data from the bourse.

 

Nickel: The most-traded SHFE June contract surged to a session high of 101,260 yuan/mt in early morning trade, before it erased some gains to end 0.83% firmer at 99,780 yuan/mt. It rose 0.82% on the week, marking the third straight week of gains.

Nickel stocks at SHFE-approved warehouses fell more than 500 mt this week to 27,461 mt as of April 24, showed data from the bourse.

 

Lead: The most-liquid SHFE June contract oscillated in a range of 100 yuan/mt around the daily moving average to close the day flat at 13,775 yuan/mt. Trading volumes continued to shrink as both longs and shorts tended to maintain a wait and see position. SHFE lead is expected to remain rangebound before there are tangible changes to fundamentals. The contract gained 0.44% on the week, marking the fourth consecutive weekly change of less than 1%.

Lead stocks at SHFE-approved warehouses declined over 800 mt this week to 7,074 mt as of April 24, showed data from the bourse.

 

Tin: The most-traded SHFE June contract reversed an earlier slip to close the day 1.15% at 128,870 yuan/mt. It produced a weekly gain of 0.57%, registering a five-week winning streak. Resistance is still seen at 130,000 yuan/mt, while support is at the 40-day moving average at 125,000 yuan/mt.

Tin stocks at SHFE-approved warehouses shrank more than 100 mt this week to 3,702 mt as of April 24, showed data from the bourse.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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