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SMM Evening Comments (Apr 30): Shanghai base metals closed mixed but wrapped up April mostly with a rally
Apr 30,2020 18:55CST
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Source:SMM
SHFE base metals closed mixed on the last trading day of April, as investors assessed mixed Chinese economic data and positive developments on a potential new treatment for Covid-19.

SHANGHAI, Apr 30 (SMM) – SHFE base metals closed mixed on the last trading day of April, as investors assessed Chinese economic data and positive developments on a potential new treatment for Covid-19.

 

Copper rose 0.9%, zinc gained 0.7% and aluminium advanced 0.6%, while lead and tin fell 0.7% and nickel dropped close to 0.8%.

 

Base metals on the LME eased across the board after the European trading session began, and were all in negative territory as of 18:54 Beijing time.

 

For the month, SHFE base metals, except for lead, staged a rally as a slowdown in infection rates, hopes for global economy reopening, stimulus efforts by central banks, and the economic recovery in China helped improve investor sentiment.   

 

China on Friday will kick off the five-day Labour Day holiday, and the SHFE will remain closed until May 6 when the night trading session will also be resumed.

 

Official data showed that China’s manufacturing activity expanded for a second straight month in April. The National Bureau of Statistics (NBS)’s manufacturing purchasing managers’ index (PMI) for April came in at 50.8, as compared to 52.0 in March. PMI readings above 50 signify expansion, while those below that mark indicate contraction.

A subsequent private survey also released on Thursday, on the other hand, showed manufacturing activity in April contracting instead. The Caixin/Markit manufacturing PMI fell to 49.4, from March's expansionary 50.1.

As the coronavirus pandemic shattered global demand, Chinese manufacturers saw a substantial drop in export orders in the past month, slowing overall activity recovery.

 

Gilead Sciences said Wednesday preliminary results of a coronavirus drug trial showed at least 50% of patients treated with a five-day dosage of remdesivir improved and more than half were discharged from the hospital within two weeks. The positive developments gave a boost to US stocks on Wednesday.

 

The closely watched US weekly unemployment data will be released tonight. Another 3.5 million workers are expected to have filed for benefits last week, which would bring the total number of Americans seeking unemployment benefits over the last six weeks to about 30 million.

 

Copper: The most-traded SHFE June contract extended gains from a higher open to finish the day 0.87% higher at 42,940 yuan/mt, its highest close in seven weeks and sitting around the 60-day moving average. For the month, the contract surged 9.71%, marking the first increase in four months and the biggest one-month percentage gain since November 2016.

SMM data showed that copper inventories across Shanghai, Jiangsu and Guangdong fell for a sixth straight week this week.

SMM PMI for China’s copper downstream sectors, including construction, power, electronics, transport and home appliances, climbed to 54.82 in April, which was the highest since March 2019 and rose from 51.55 in March.

 

Aluminium: The liquidation of more than 2,600 lots of short positions boosted the most-liquid SHFE June contract in the final hour of trading, helping it recoup earlier losses to close the day 0.6% higher at 12,660 yuan/mt, its highest close since March 17. The contract jumped 9.23% on the month, which was the first increase in four months and the biggest one-month percentage gain since August 2017.

Longs were rolling to the July-to-November contracts, given positive fundamentals. SMM data showed that social inventories of primary aluminium ingots dropped 155,000 mt this week, while spot premiums held firm and backwardation on SHFE aluminium widened as smelters scaled back deliveries and demand remained robust.

 

Zinc: The SHFE June contract closed 0.68% higher at 16,400 yuan/mt after a wild trading session. Today’s closing price was the highest since February 27, and produced a monthly gain of 8.18%, after two consecutive months of declines. The July contract has overtaken the June one to be the most actively traded SHFE zinc contract.  

SMM data showed that social inventories of zinc ingots in China continued their steep decline this week, decreasing 19,600 mt from last Friday to 229,600 mt, after a 25,700 mt drop in the previous week.

 

Nickel: The most-traded SHFE July contract saw its losses accelerate in afternoon trade and shed 0.76% on the day to end at 99,950 yuan/mt. It has fallen below the 10-day moving average but remains above the 60-day one, and registered a gain of 8.84% for the month of April, stemming three consecutive months of declines. Price spreads between SHFE nickel contracts were small, leaving limited arbitrage opportunities for traders.

SMM PMI for China’s downstream nickel industries, including stainless steel, electroplating, alloy and battery, stood at 51.76 in April, down 4.55 points from March.

 

Lead: The most-active SHFE June contract slipped for a third straight day, shedding 0.69% to end at 13,660 yuan/mt. For the week, it lost 0.83%, marking the fifth consecutive weekly change that is smaller than 1%. The contract was 0.55% lower on the month, registering an eight-month losing streak.

SMM data showed that lead social stocks across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin extended their decline, falling over 400 mt from a week ago to 8,300 mt as of April 30.

 

Tin: The most-liquid SHFE July contract slid to an intraday low of 126,330 yuan/mt in morning trade, before it recovered some ground to close the day 0.73% lower at 127,390 yuan/mt. For the month, SHFE tin staged a substantial rally, gaining 7.13%, which is the biggest monthly percentage increase since May 2017.

Evening comments
Copper
Aluminium
Zinc
Nickel
Tin
Lead

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