SMM Evening Comments (Mar 23)

SHANGHAI, Mar 23 (SMM) – Base metals fell across the board as trade tensions intensified. SHFE nickel led a slump of 3%, tin lost close to 2% and copper fell 1.7%. Lead and aluminium slid over 1%, while zinc dipped.

The ferrous complex tumbled as rebar declined over 7%, iron ore fell 6% and hot-rolled coil lost 5%. Coke dropped close to 6%, while coking coal slid over 4%.

Copper: SHFE copper saw an outflow of 548 million yuan. The support at 49,800 yuan/mt eased its downward momentum, but we expect it to continue to weaken as the market settles. The market will take guidance from CEO and President of the Federal Reserve Bank of Atlanta, Raphael Bostic, as he shares his economic outlook tonight.

Aluminium: Protectionist trade policies by the US against China dragged SHFE aluminium below moving averages. However, the anticipated recovery of consumption will support bullish sentiments.

Zinc: Investors held mixed views as the potential trade war loomed and as consumption rebounded. The SHFE 1805 contract saw more short-term runs during the day. We expect it to trade rangebound tonight.

Nickel: SHFE nickel 1805 contract dipped after opening and hit a low of 96,900 yuan/mt as investors cut their long positions. It closed at 97,990 yuan/mt today, down 3,100 yuan/mt from the previous day. We see it testing the current level tonight. More cues to be taken from the US durable goods orders and new home sales for February.

Lead: SHFE lead closed lower and lost yesterday’s gains. We expect it to consolidate and test support at 13,000 yuan/mt tonight.

Tin: As an expected trade war rattled market, SHFE tin tumbled and broke the 142,000 yuan/mt level. We expect it to weaken and test the 140,000 yuan/mt level tonight.

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