SMM Morning Comments (Mar 23): Base metals opened broadly lower; Shanghai copper briefly hit ‘limit down’

SHANGHAI, Mar 23 (SMM) – London and Shanghai base metals traded lower across the board in early morning trade on Monday, extending declines from the prior week, as fears over the economic impact of the global coronavirus outbreak continue to weigh heavily on investor sentiment.

The most active SHFE copper contract for May delivery plunged 8% to hit its “limit down” level at 35,300 yuan/mt shortly after the opening the bell.

On Friday, LME base metals reversed earlier gains to close mostly lower, as the US dollar bounded back towards three-year highs. Aluminium plunged 3.2% on the day to lead the losses, copper tumbled 2.3%, tin fell 1.1%, lead shed 0.2% and zinc edged down less than 0.1%. Nickel gained 0.3%.

The SHFE kept its night trading session suspended.

On Sunday night US time, US stock futures and crude prices cratered after a coronavirus stimulus bill failed a key Senate procedural vote. Earlier in the session, stocks futures hit their “limit down” levels, falling 5%.

The greenback remained firm against a basket of currencies.

Copper: Three-month LME copper eased after hitting an intraday high of $4,938.5/mt in the European trading session, and finished the day substantially lower at $4,700/mt, posting a weekly loss of 13.8%.

Aluminium: Three-month LME aluminium reversed earlier gains to touch a new low in three years and a half at $1,575/mt, shortly before it ended the day sharply lower at $1,577/mt. It is likely to move between $1,540-1,620/mt today, with the most-active SHFE 2005 contract trading at 11,250-11,800 yuan/mt. East China spot discounts are seen at 70-40 yuan/mt against the SHFE 2004 contract.

Zinc: Three-month LME zinc notched an intraday high of $1,934.5/mt in early European trading hours, before it erased all those gains to end the day a tad lower at $1,845/mt. It remains under pressure at the five- and 10-day moving averages, but supported by the lower Bollinger band. Zinc stocks across LME-approved warehouses resumed their decline, decreasing 500 mt, or 0.68% to 73,200 mt on Friday. LME zinc is expected to trade at $1,810-1,860/mt today with the most-traded SHFE May contract hovering between 14,500-15,000 yuan/mt. Spot premiums for domestic 0# Shuangyan are seen at 20-40 yuan/mt over the SHFE April contract.

Nickel: Three-month LME nickel climbed past the five-day moving average and lower Bollinger band to an intraday high of $11,700/mt in early European trading hours, before it pared most of those gains to end the day higher at $11,330/mt. Whether it could remain above $11,000/mt will come under scrutiny.

Lead: Three-month LME lead climbed to an intraday high of $1,700/mt in early European trading hours, before it gave back all those gains to close the day lower at $1,635/mt.

Tin: Three-month LME tin plumbed a new more than one-decade trough of $12,715/mt in early Asian trading hours. It later rebounded through the five-day moving average to an intraday high of $14,500/mt, before easing to closing the day lower at $13,555/m to produce a weekly loss of 14.2%. Resistance is seen at $14,500/mt, while support lingers at $13,000/mt.