SMM Evening Comments (Apr 20): Shanghai base metals closed mostly higher; nickel soared more than 4%

Published: Apr 20, 2020 18:50
SHFE nonferrous metals, except for lead, closed higher on Monday, extending gains from last week, as China cut its benchmark lending rate for the second time this year as expected. Nickel surged 4.4% on the day to be the biggest gainer, aluminium rose 0.7%, copper advanced 0.3%, tin climbed 0.2% and zinc inched up 0.1%. Lead bucked the trend and dropped 1.2%.

SHANGHAI, Apr 20 (SMM) – SHFE nonferrous metals, except for lead, closed higher on Monday, extending gains from last week, as China cut its benchmark lending rate for the second time this year as expected.

 

Nickel surged 4.4% on the day to be the biggest gainer, aluminium rose 0.7%, copper advanced 0.3%, tin climbed 0.2% and zinc inched up 0.1%. Lead bucked the trend and dropped 1.2%. The SHFE will keep its night trading session suspended.

 

On the LME, nickel was also the best performer and more than 2.3% higher on the day as of 18:49 Beijing time. Tin reversed an earlier slip to be nearly 0.2% higher, while other metals were in the red, as a plummet in US oil prices jittered the markets.

 

China on Monday cut its one-year loan prime rate to 3.85% from 4.05%. The five-year loan prime rate was also reduced to 4.65% from 4.75%. The moves marked the second cut to the loan prime rates for 2020, and came after quarterly data released Friday showed that China’s economy contracted for the first time in decades.

 

Expectations of more stimulus measures also lent some support to the market, as the Standing Committee of the 13th National People's Congress (NPC), China's top legislature, will convene its 17th session from April 26 to 29 in Beijing, according to a statement issued after a chairpersons' meeting Friday.

 

US crude prices resumed their plunge in the afternoon of Asian trading hours as traders continued to fret over a slump in demand due to the coronavirus pandemic while weighing the latest coronavirus news.

 

Copper: The most-liquid SHFE June contract fell swiftly in the final minutes of trading, erasing some of earlier gains to close the day 0.31% higher at 42,330 yuan/mt. SHFE copper held stable at highs in more than a month, supported by persistent concerns over ore supply.

 

Aluminium: The most-traded SHFE June contract refreshed its one-month high at 12,460 yuan/mt in morning trade, before it relinquished some of those gains to end the day 0.69% higher at 12,340 yuan/mt. SHFE aluminium appeared to take a breather after registering its biggest percentage weekly gain since August 2017.

 

Zinc: The most-traded SHFE June contract plummeted to an intraday low of 15,975 yuan/mt in early morning trade, as some longs exited. It later clawed back those losses and returned to highs in one month and a half, as social inventories in China extended their decline over the weekend and given lingering concerns over closures of mines overseas. The contract edged up 0.12% on the day to end at 16,130 yuan/mt.

 

Nickel: The most-traded SHFE June contract soared 4.42% to finish the day at 102,300 yuan/mt, its highest close in more than five weeks, building on substantial gains recorded last Friday. Today’s massive gain helped the contract break above the 100,000 yuan/mt mark and the 60-day moving average.    

 

Lead: The most-liquid SHFE June contract extended losses from a lower open to lows in more than a week in early morning trade. It later hovered in a tight range to finish the day 1.24% lower at 13,595 yuan/mt. Support was at 13,500 yuan/mt, as low inventories and tight spot supply deter shorts from aggressively loading up positions.

 

Tin: Tracking a strong ascent in nickel, the most-traded SHFE June contract reversed an earlier slip to a five-week high of 129,490 yuan/mt, near the 60-day moving average, in morning trade. As longs took profits, the contract later gave back almost half of those gains and closed the day only 0.16% higher at 128,270 yuan/mt. SHFE tin remains above the five-day moving average, while resistance lingers at 130,000 yuan/mt.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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