SMM Evening Comments (Apr 17): Shanghai base metals rose broadly despite dismal China data

SHANGHAI, Apr 17 (SMM) – SHFE nonferrous metals closed higher across the board on Friday, as fresh optimism over the coronavirus pandemic helped investors shrug off dismal economic data.

Aluminium extended its rally, advancing 3.2% on the day to the biggest gainer, and registered its best week since August 2017. Nickel surged 2.7%, tin jumped 2.1%, copper climbed 1.9%, zinc rose 1.3%, and lead increased 0.5%. The SHFE will keep its night trading session suspended.

On the LME, base metals also posted strong performance in Asian trading hours, but eased after the European session kicked off. Tin and lead have dived into the red as of 18:24 Beijing time.

US stock futures surged after a report said a Gilead Sciences drug showed effectiveness in treating the COVID-19. The move pointed to a jump for the stock market on Friday.

Early plans to re-open the US economy also drove fresh optimism and risk appetite. US President Donald Trump on Thursday announced guidelines for a return to work in the world’s biggest economy — a gradual, three-stage process dependent on robust virus testing and subject to state governors’ discretion.

Data published on Friday morning showed that China’s GDP shrank 6.8% in the first quarter from a year ago, the first reversal since at least 1992, as the coronavirus outbreak paralysed production and spending.

Overnight US unemployment report showed that the pandemic crisis has already turned some 22 million Americans out of work, nearly wiping out all the job gains since the Great Recession.

Copper: The most-liquid SHFE June extended gains from a higher open to finish the day 1.9% firmer at 42,280 yuan/mt. It strengthened 1.34% on the week, registering a four-week winning streak.

Aluminium: The most-traded SHFE June contract saw its gains accelerate in afternoon trade, and hit its highest since March 19 at 12,430 yuan/mt shortly before ending the day 3.24% higher at 12,410 yuan/mt. Three consecutive days of substantial gains produced a weekly increase of 4.77%, the biggest percentage weekly gain since August 2017 for SHFE aluminium.

Zinc: The most-traded SHFE June contract notched its highest since March 5 at 16,195 yuan/mt in early morning trade, before it erased some gains to finish the day 1.29% higher at 16,130 yuan/mt. It advanced 3% on the week, marking the fourth straight weekly gain. Buying appeared to have eased, but concerns about mine supply will continue to underpin zinc prices.

Nickel: The most-traded SHFE June contract surged 2.74% on the day to end at 98,970 yuan/mt, its highest close in a month. Today’s significant gain helped the contract claw back losses from Thursday’s plunge and created a weekly increase of 1.71%. SHFE nickel has stood above the 40-day moving average following two consecutive weeks of gains, and now faces pressure at 100,000 yuan/mt.

Lead: The most-liquid SHFE June contract eased in afternoon trade, as weak consumption and more discount quotes for secondary lead encouraged shorts to enter the market. The contract gave back some earlier gains to close the day 0.48% higher at 13,715 yuan/mt, and inched up 0.4% on the week. Weekly changes in the contract in the past three weeks were all less than 1%, and its five- and 10-day moving averages are adhering to each other.

Tin: The most-traded SHFE June contract rose 2.08% on the day to end at 128,140 yuan/mt, its highest close since March 13 and standing above the five-day moving average. This helped it recoup losses from previous sessions to create a weekly gain of 1.37%, marking the fourth straight weekly increase. Resistance is seen at 130,000 yuan/mt.