LIVE FUTURES REPORT 16/03: SHFE base metals prices down on worsening economic outlook; Ni bucks trend

Base metals prices on the Shanghai Futures Exchange were largely down at the close of the morning trading session on Monday March 16, with tin leading the charge lower, while nickel was the lone metal to secure any gains.

The broadly weak start to the new trading week comes after the US Federal Reserve on Sunday dropped its benchmark interest rate to zero and announced it is launching a new round of quantitative easing in a bid to stimulate the country’s economy amid the ongoing novel coronavirus (2019-nCOV) pandemic.

The new federal funds rate, used as a benchmark for short-term lending for financial institutions, will now be targeted at 0-0.25% down from a previous target range of 1-1.25%.

But markets responded poorly to the US central bank’s move, perceiving it to be one of panic, leaving participants decidedly risk-off this morning while fears over the virus’ economic impact continue to linger.

As a result, base metals prices on the SHFE broadly fell over the morning trading session, with tin giving the worst performance of its complex in terms of percentage losses.

The most-traded June slid to 127,560 yuan ($) per tonne at the close of morning trading on Monday, down by 2,240 yuan per tonne or 1.7% from Friday’s close of 129,800 yuan per tonne.

Losses were also observed in May copper at 43,480 yuan per tonne (-0.4%), May aluminium at 12,850 yuan per tonne (-0.5%), May zinc at 15,750 yuan per tonne (-0.4%) and May lead at 14,105 yuan per tonne (-0.3%).

Nickel was the lone metal in positive territory at the end of the morning trading session, with the metal supported by expectations of tightened supply after the Philippines announced a ban on all vessels entering Surigao del Norte from March 18 to March 31. The disruption is expected to remove almost 1% of the Philippines’ annual mined nickel ore from the market.

Nickel’s most traded June contract price rose 100,080 yuan per tonne, up by 780 yuan per tonne or 0.8% from Friday’s close of 99,300 yuan per tonne.

Other highlights

  • The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was slightly down by 0.1% at 98.24 as at 12.18am Shanghai time.
  • The Shanghai Composite Index was down by 0.55% at 2,871.49 as at 11.30 am Shanghai time.
  • In data on Friday, the preliminary University of Michigan consumer sentiment index fell to 95.9 in March from 101 in February – its weakest reading in five months.