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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.
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