SMM Morning Comments (Apr 27): Shanghai base metals opened higher across board Monday amid buoyant sentiment

SHANGHAI, Apr 27 (SMM) – SHFE nonferrous metals traded higher across the board on Monday morning, following stabilised prices last Friday, as investors weighed further signs of positive developments in the global fight against the coronavirus.

Shanghai tin climbed as much as close to 3% in early trades Monday, with zinc adding more than 2% and copper rising about 1.5%. 

The US Federal Reserve will join the Bank of Japan and the European Central Bank to announce policy decisions this week with some countries proceeding on steps to relax lockdown measures and reopen the economy. The first-quarter gross domestic product numbers from the US and the eurozone, and the manufacturing data from China and the US will be watched this week. 

LME base metals mostly gained last Friday, with copper leading the increases with a rise of 0.95%. Aluminium added 0.3%, nickel climbed 0.53%, zinc rose 0.61%, while tin lost 0.47% and lead slipped 1.34%.

Copper: London copper advanced on Friday, recovering its previous losses caused by the oil market turmoil, as a rise in the coronavirus infections in South America sparked concerns about extended disruptions of mining operations and delivery from key supplier Peru and Chile. The market awaits for policy moves from central banks to grapple with the economic fallout amid the ongoing pandemic. Three-month LME copper is expected to trade between $5,200-5,250/mt today with the most-active SHFE contract at 42,000-42,500 yuan/mt. Spot premiums are likely at 150-180 yuan/mt but elevated futures may suppress some demand.

Zinc: Three-month LME zinc climbed to a session high of $1,895.5/mt on Friday, closing up 0.61% on the day at $1,886/mt, as worries about raw materials supply rose after Peru extended the state of emergency in the country up to May 10. Pressure above remained from the Bollinger middle band and the 20-day moving average. LME zinc inventories edged down 0.6%, or 600 mt, to 99,475 mt, staying at high levels. The morale of longs is expected to keep LME zinc between $1,870-1,920/mt today, with the most-active SHFE June contract trading at 15,700-16,200 yuan/mt. Premiums of 0# domestic Shuangyan zinc is likely at 150-170 yuan/mt against the SHFE May contract. 

Nickel: Three-month LME nickel remained in an upward trend, as it halted decline at an intraday low of $12,045/mt and rebounded to finish the day 0.53% higher at $12,250/mt. The K-indicator remained between the five- and 60- day moving averages. Today, support from the 60-day moving average will be monitored. 

Lead: Three-month LME lead trended downwards during the European trading hours on Friday, slipping to a session low of $1,611.5/mt and ended the day 1.34% lower at $1,624/mt. Bearish prospects for lead consumption may expand its downside room today. 

Tin: Three-month LME tin consolidated at highs, giving up some gains from the previous session and ending at $14,910/mt, down $70/mt on the day. LME tin inventories shrank 140 mt on Friday to 6,045 mt. Support below is seen from the 20-day moving average, or $14,700/mt today.