SMM Morning Comments (Apr 16): Shanghai base metals opened mostly lower after weak US data

SHANGHAI, Apr 16 (SMM) – SHFE nonferrous metals fell for the most part on Thursday morning, giving up gains from earlier sessions this week, as record drops in the US retail sales and industrial production intensified investors fears about the damage caused by the coronavirus lockdowns. 

Overnight, LME base metals failed to hold onto gains from Tuesday, with tin leading the losses and dipping 2.13%. Copper shed 1.48%, aluminium fell 0.2%, nickel slipped 1.13%, zinc lost 0.16% and lead went down 0.32%. 

US benchmark oil futures settled at their lowest since early 2002 on Wednesday, after the US reported a 19 million-barrel buildup in inventories, the biggest weekly increase ever. 

The International Energy Agency also warned of a record decline in crude demand this year as a result of the COVID-19 pandemic. 

Copper: Downbeat US economic data and plunged oil prices sent three-month LME copper 1.48% lower on Wednesday. Trading range today is expected at $5,060-5,120/mt with that of the most-active SHFE contract at 41,200-41,600 yuan/mt. Spot offers will likely stay at premiums of 80-100 yuan/mt amid some purchasing demand from traders. 

Aluminium: Three-month LME aluminium relinquished early gains after a strengthened SHFE aluminium lifted it to a session high of $1,529/mt. It finished 0.2% lower on the day at $1,516/mt. Weak fundamentals may keep it between $1,490-1,520/mt today. Meanwhile, the steady return of domestic demand and greater shipments of aluminium ingots will support prospects for Shanghai aluminium prices. 

Zinc: Three-month LME zinc lost increase in early session given pressure from the 40-day moving average, finishing the day 0.16% lower at $1,927/mt. LME zinc inventories continued to build up by 2,450 mt to 99,750 mt on Wednesday. This grew pessimistic outlook for zinc prices in the long term amid the lingering impact of the coronavirus on demand. LME zinc is expected to trade between $1,900-1,950/mt today with limited upward room, and the most-traded SHFE contract is seen trading at 15,500-16,000 yuan/m today. The strength of the domestic inventory draw will be closely monitored. 

Nickel: Three-month LME nickel closed lower after five consecutive sessions of increase, as it came off from an intraday high around $12,000/mt amid a broad decline of base metals, ending down 1.13% on the day at $11,770/mt. LME nickel is expected to remain rangebound between the five- and 40- day moving averages today. 

Lead: Three-month LME lead fell to a session low of $1,679/mt before it found strong support from below and ended the day 0.32% lower at $1,698/mt. 

Tin: Three-month LME tin trimmed some declines as it recovered after slipped to an intraday low of $14,885/mt, ending at $15,130/mt, down 2.13% on the day. Inventories across LME-listed warehouses shrank 325 mt on Wednesday to 6,770 mt. LME tin is expected to test support from $15,000/mt today.