LIVE FUTURES REPORT 13/03: SHFE base metals prices slide following stock market rout; Sn drops 4%

Base metals prices on the Shanghai Futures Exchange were down across the board at the close of morning trading on Friday March 13, with the complex tracking pronounced weakness in broader markets overnight and this morning.

Heightened fear among investors that the novel coronavirus (2019-nCOV) outbreak will wipe out economic growth led to further steep losses in the US stock market overnight, with the Dow Jones Industrial Average (DJIA) and the S&P 500 Index both recording their biggest one-day declines since 1987. The DJIA ended Thursday down by 2,352.6 points or 9.99% at 21,200.62, while the S&P 500 plummeted 9.5% to 2,480.64.

There has been follow-through weakness in Asian markets so far on Friday, too. In Japan, the benchmark Nikkei Stock Average dropped by 1,506.8 points or 8.11% to 17,053.55 as at 12.07pm Shanghai time, while Hong Kong’s Hang Seng Index fell by 1,376.31 points or 5.66% to 22,932.76.

The Shanghai Composite Index also declined, but more modestly, with a decrease of 3.32% to 2,826.37 as at 11.30 am Shanghai time.

The panic in broader markets has also roiled the base metals, with prices on the SHFE all declining this morning.

Tin gave the worst performance of its complex in terms of percentage losses. The most-traded June contract slid to 128,590 yuan ($18,358) per tonne at the close of morning trading on Friday, down by 5,400 yuan per tonne or 4% from Thursday’s close of 133,990 yuan per tonne.

“Market sentiment is souring amid fears about the virus spread globally, and so far measures [taken by governments and central banks] have failed to provide assurance to the market, which is hurting the base metals, especially when the fundamental side offers little help,” a Shanghai-based base metals analyst said.

Losses were also seen in June nickel at 97,110 yuan per tonne (-3.43%), May zinc at 15,630 yuan per tonne (-1.29%), May copper at 42,980 yuan per tonne (-1.08%), May lead at 14,115 yuan per tonne (-0.95%) and May aluminium at 12,815 yuan per tonne (-0.43%).

Other highlights

  • The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was up very slightly by 0.01 at 97.48 as at 11.32am Shanghai time.
  • It is a light day for data on Friday with releases from the United States that include import prices and the University of Michigan’s consumer sentiment and inflation expectations. Leading indicators from the United Kingdom are also due.
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