SMM Evening Comments (Mar 25): Shanghai base metals extended rally as US reached COVID-19 stimulus deal

SHANGHAI, Mar 25 (SMM) – SHFE nonferrous metals, except for nickel, extended their rally from the previous day as investors’ sentiment was lifted after the White House and Senate struck a coronavirus stimulus bill.

SHFE tin continued to lead the increase, surging 4.23%. Aluminium gained 2.59% on news that some Chinese smelters cut production due to expanded losses amid the virus outbreak. Copper advanced 3.17%, lead increased 0.93%, zinc rose 0.71%, while nickel shed 0.52%. 

The ferrous complex also traded higher as iron ore added 5.06% as supply concerns grew after more countries ordered lockdowns to contain the spread of the COVID-19 pandemic. Rebar expanded 1.46%, hot-rolled coil rose 0.94%, stainless steel climbed 1.57%, and coke went up 1.27%.

The White House and Senate leaders reached a deal early Wednesday on a massive $2 trillion coronavirus stimulus bill to combat the economic impact of the outbreak.

Copper: The most-liquid SHFE May contract surged above 39,100 yuan/mt in the afternoon session and closed 3.17% higher on the day at 39,360 yuan/mt. The higher copper prices were also driven by supply woes as Canadian miner First Quantum Minerals said production at its Cobre Panama copper mine would increase at a slower-than-expected pace after several workers were infected with the COVID-19. Without a clear sign that the outbreak will be contained soon, the SHFE contract is expected to test support from 39,000 yuan/mt. 

Aluminium: The most-traded SHFE May contract rose on short-covering and closed up 2.59% higher on the day at 11,700 yuan/mt, above the five-day moving average. An SMM survey found that the virus-driven output cut at Chinese aluminium smelters has expanded to 445,000 mt/year. However, there is little sign that aluminium prices have bottomed out, and the development of cutbacks will be closely watched. 

Zinc: The most-active SHFE May contract extended its rangebound trend at low levels, as it recovered after slipped to a session low of 14,715 yuan/mt, ending up 0.71% on the day at 14,905 yuan/mt. Limited change was seen in zinc fundamentals.

Nickel: The most-traded SHFE June contract followed a similar trading pattern from the previous two days as it came off after opened at a high level of 93,500 yuan/mt today. It fell below the Bollinger lower band and closed the day 0.52% lower at 91,890 yuan/mt. Strong support was seen from 90,000 yuan/mt. 

Lead: The most-active SHFE May contract climbed to an intraday high of 13,555 yuan/mt and finished 0.93% higher on the day at 13,550 yuan/mt, with support from fundamentals and loaded-up longs. Pressure above from the 10-day moving average will be monitored. 

Tin: The most-liquid SHFE June contract surged after fell to a session low of 113,270 yuan/mt, ending the day 4.23% higher at 116,760 yuan/mt. Pressure above is seen from 117,500 yuan/mt.