LIVE FUTURES REPORT 19/03: SHFE base metals prices down heavily again; Sn plunges 7.8%

Base metals prices on the Shanghai Futures Exchange were down across the board at the close of morning trading on Thursday March 19 amid continued broad-based risk aversion, with tin leading the complex lower with a drop of 7.8%.

The rapid spread of the novel coronavirus (2019-nCoV) and rising death toll in regions outside of China, particularly Europe and the United States, continues to stoke fears among investors of prolonged virus-related recession.

“With a more extensive and far quicker spread of the virus than generally expected just weeks ago and with early evidence that the impact on Chinese activity was far worse than initially projected, investors are hunkering down for a severe global recession,” Stephen Innes, chief Asia market strategist at foreign exchange brokerage Axitrader, said in a note on Thursday.

Globally there have been nearly 9,000 deaths from the disease caused by the coronavirus, while the number of confirmed cases around the world is nearing 220,000, according to the World Health Organization.

Italian authorities reported 475 new coronavirus deaths in a single day on Wednesday, bringing total deaths to 2,978, with the number of confirmed infections in the country at 35,713. Elsewhere in Europe, Spain has reported 638 deaths so far with a total of 14,769 confirmed cases of the infection.

In the US, the death toll stands at 155 while the number of people confirmed to have the virus is 9,436.

In response, authorities around the world have rolled out containment measures including travel restrictions, quarantines and in more serious cases full lockdowns of cities and regions. The unknown economic impact of prolonged lockdowns and these other containment measures have left investors on edge.

This heightened risk aversion was clearly seen on the SHFE this morning, with the SHFE base metals all down at the close of the morning trading session.

“SHFE prices are falling limit down as the Chinese realize they are not alone in this world and that end-user demand for many of their products are crumbling as the virus spreads across Europe and the US,” Anna Stablum, a Singapore-based analyst told Fastmarkets on Thursday.

In terms of percentage losses, tin was the worst performer of the SHFE base metals this morning, tracking the more than 8% plunge seen in the LME three-month tin price at the close on Wednesday.

The most-traded June tin contract fell to 108,190 yuan ($15,387) per tonne at the end of the early session this morning, down by 9,200 yuan per tonne or 7.8% from Wednesday’s close of 117,390 yuan per tonne.

The rest of the SHFE complex also weakened, but to lesser degrees: May copper at 37,570 yuan per tonne (-6%), May aluminium at 11,735 yuan per tonne (-4.6%), May zinc at 14,330 yuan per tonne (-3.7%), May lead at 12,740 yuan per tonne (-2.6%) and June nickel at 93,100 yuan per tonne (-2.1%).

Other highlights

  • The dollar index, which gauges the strength of the US dollar against a basket of foreign currencies, was at 101.39 as at 11.30am Shanghai time, up from a reading of 99.28 at a similar time on Wednesday.
  • The Shanghai Composite Index was down by 2.14% at 2,670.37 as at 11.30 am Shanghai time.
  • In US data on Wednesday, building permits in February were at a seasonally adjusted annual rate of 1.46 million in February, below the expected 1.50 million, while housing starts were at 1.62 million in the same month, beating the expected reading of 1.51 million.
  • Data of note from the US on Thursday includes the Philadelphia Federal Reserve Manufacturing Index, unemployment claims and leading indicators from the Conference Board.