SMM Evening Comments (May 14): Shanghai base metals mostly fell on concerns about coronavirus crisis

Published: May 14, 2020 18:47

Save

SHFE nonferrous metals, except for aluminium and nickel, closed lower on Thursday, following after they opened mostly lower Wednesday, as concerns of the economic fallout from the coronavirus pandemic continued to grip investors.

SHANGHAI, May 14 (SMM) – SHFE nonferrous metals, except for aluminium and nickel, closed lower on Thursday, following after they opened mostly lower today, as concerns of the economic fallout from the coronavirus pandemic continued to grip investors.

US Federal Reserve Chairman Jerome Powell on Wednesday warned of “significant downside risks” from the coronavirus pandemic and suggested that the path ahead is “highly uncertain.”

Zinc fell the most with a drop of 1.2%. Copper shed 0.16%, lead slipped 0.93%, tin fell 0.41%, while aluminium added 1.05% and nickel climbed 0.2%.

The ferrous complex traded in a mixed note as iron ore increased 1.09%, hot-rolled coil gained 0.33%, coke advanced 2.6%, while rebar eased 0.52%, and stainless steel went down 0.11%.

East China’s Jiangxi province has introduced 16 measures to support the copper industry, including offering tax incentives, preferential electricity prices, and steps to expand copper consumption. The move offset part of the bearish sentiment as investors assessed the macroeconomic development.

Copper: The most-traded SHFE June contract managed to hold stable around 43,010 yuan/mt after loaded-up shorts weighed it to a session low of 42,800 yuan/mt. Departing long positions near closing sent the contract 0.16% lower on the day at 42,910 yuan/mt. The price spread between the SHFE May and June contracts narrowed to around 150 yuan/mt. With continued support from the 20- and 60- day moving averages, the June contract is expected to test support from 43,000 yuan/mt tonight.

Copper stocks in warehouses tracked by the London Metal Exchange jumped by the most in nearly three months on Thursday, as consumption beyond China has been hit hard by the COVID-19 lockdown restrictions.

Aluminium: The most-liquid SHFE July contract showed signs of breaking up the 60-day moving average above as it moved to a session high of 12,575 yuan/mt before ending up 1.05% higher on the day at 12,530 yuan/mt. SMM data showed that domestic social inventories of primary aluminium and aluminium billet continued to fall sharply this week, pointing to stable consumption. The price difference between the May and June contracts will be monitored as the May contract will finish its last trading day Friday.

Zinc: The most-active SHFE July contract fell for the fourth consecutive day on the back of rising shorts, further giving up gains from the previous week. It slipped to a session low of 16,325 yuan/mt and closed 1.2% lower on the day at 16,430 yuan/mt. Ample domestic inventories may see the contract pulling back further tonight and support from the 40-day moving average will be watched.

Nickel: The most-traded SHFE July contract again posted a V-shaped rebound, as it bounced back after dipped to an intraday low of 100,210 yuan/mt, ending the day 0.2% higher at 101,170 yuan/mt. The contract is expected to continue to trade rangebound between the five- and 10- day moving averages tonight.

Lead: The most-active SHFE June contract slowed its downward trend and hovered weakly around the daily moving average, closing the day 0.93% lower on the day at 13,860 yuan/mt. Firm prices of battery scrap could offer some support to near-term lead prices.

Tin: The most-liquid SHFE July contract traded lower on Thursday, ending at 129,600 yuan/mt, 0.41% lower on the day, following an intraday low of 129,150 yuan/mt. Support from the 20-day moving average, or 127,500 yuan/mt will be monitored tonight.

Evening comments Futures movement Copper Aluminium Zinc Nickel Lead Tin

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.

For any inquiries or for more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

2 hours ago

Yingkou Jianfa Shenghai Phase I 300,000 mt Copper Cathode Project Smelting Furnace Starts Production, Pyrometallurgy System Enters Furnace Drying Stage

At 9:58 on September 12, the core smelting furnace of the pyrometallurgy system at Yingkou Jianfa Shenghai Nonferrous Metals & Chemicals Co., Ltd.'s multi-metal recovery project was successfully ignited, officially entering the furnace drying stage and marking a key step toward full-line commissioning and production. Public information shows that the Yingkou Jianfa Shenghai polymetallic complex gold-silver ore comprehensive recovery technology upgrade, relocation, and expansion project uses copper concentrates as its main raw material, with an overall planned capacity of 600,000 mt/year of copper cathode to be built in two phases, with capacity of 300,000 mt/year in each phase. Phase I is designed to produce 300,000 mt/year of copper cathode and 1.18 million mt/year of sulphuric acid, along with supporting systems for smelting, converting, anode refining, electrolysis, slag beneficiation, and precious metal recovery. After this ignition, the project will carry out standardized furnace drying and hot-state integrated trial runs across the entire system to verify equipment, instruments, interlocks, and automatic control systems. The project has not yet formally started raw material feeding and production; after furnace drying and system commissioning are completed, it will further advance the commissioning of Phase I's 300,000 mt/year copper cathode capacity. If the project is successfully brought into production, it is expected to increase copper smelting capacity in North China and further boost domestic demand for copper concentrate raw materials.

2 hours ago

17 hours ago

Alchemy Resources Starts Drilling Copper-Gold Targets at Yellow Mountain

Alchemy Resources announced on September 11 that reverse-circulation drilling has commenced across its Yellow Mountain and Overflow projects in New South Wales, Australia, with up to 15 holes planned during the latest exploration campaign. At the 80%-owned Yellow Mountain project, drilling will test extensions to previously identified copper-gold and polymetallic mineralisation, as well as two previously undrilled geophysical targets. Previous drilling at Yellow Mountain returned an intersection of 113 metres grading 1.17% copper equivalent, comprising 0.33% copper, 0.37 g/t gold, 24.3 g/t silver, 0.86% lead and 1.23% zinc. The latest drilling campaign is designed to test whether the known mineralised system extends into newly identified target areas. The program will also include drilling at the Overflow project, where Alchemy is targeting extensions to existing mineralisation along strike and at depth. Overflow currently hosts an inferred mineral resource of approximately 342,000 ounces of gold equivalent and contains gold, silver, copper, lead and zinc mineralisation. The commencement of drilling provides a near-term test of the scale and continuity of mineralisation at Yellow Mountain. The previously reported broad copper-gold-polymetallic intersection indicates potential for a sizeable mineralised system, while the newly defined geophysical targets provide additional exploration upside. Drilling results will be important in determining whether the mineralised footprint can be materially expanded.

17 hours ago

Freeport CEO Signals Likely Go-Ahead for $4.5 Billion Bagdad Copper Expansion

Freeport-McMoRan Chief Executive Officer Kathleen Quirk has indicated that the company expects to move forward with the proposed expansion of its Bagdad copper mine in Arizona, marking a stronger commitment to the project ahead of a formal investment decision. Speaking at the Jefferies Global Industrials Conference on September 10, Quirk said the project still requires input from Freeport's board but that she expects the company will proceed. She described the expansion as a roughly three-year construction project and noted that no major permitting hurdles are expected. Freeport's latest project estimates put capital expenditure for the Bagdad expansion at approximately US$4.5 billion, around 30% above the previous US$3.5 billion estimate, reflecting cost escalation, scope changes and additional engineering. The project would more than double concentrator capacity at Bagdad and is expected to add approximately 200–250 million lb, or around 91,000–113,000 tonnes, of copper production annually, alongside an additional 10–12 million lb of molybdenum. Bagdad currently has a reserve life exceeding 80 years. Freeport's Q2 2026 regulatory filing had described the project as being prepared for a potential investment decision during the second half of 2026. The latest comments therefore represent a more positive signal from management on the likelihood of development, although formal board approval has not yet been announced. A decision to proceed with Bagdad would represent one of Freeport's most significant near-term copper growth investments in the US. The potential addition of more than 90,000 tonnes per year of copper would materially increase Freeport's US output, although first production would remain several years away given the expected construction period. Attention will now turn to formal board approval and a final investment decision.

17 hours ago