SMM Morning Comments (Feb 26): Shanghai base metals traded mixed on Wednesday morning

Published: Feb 26, 2020 09:43
LME base metals traded mostly higher overnight as the US dollar dipped. LME lead led the increase with a rise of 1.7%.

SHANGHAI, Feb 26 (SMM) – SHFE nonferrous metals traded mixed on Wednesday morning, after the US stock market plunged for the second day amid the eruption of new coronavirus cases outside of China. 


LME base metals traded mostly higher overnight as the US dollar dipped. LME lead led the increase with a rise of 1.7%. Tin climbed 1.3%, nickel added 0.5%, aluminium gained 0.2%, while copper shed 0.2%, and zinc slipped 0.3%. The SHFE night trading session remained suspended to contain the virus outbreak.


Copper: Three-month LME copper consolidated at low levels and failed to stand above $5,700/mt as investors worried about the economic impact of the COVID-19 following rising cases worldwide. New cases are being reported in Europe and the Middle East, far outside the epicentre of China. This has raised fears that the virus could spread further. Today, LME copper is expected to trade between $5,650-5,710/mt, with the most-active SHFE contract at 45,650-46,050 yuan/mt. Spot discounts are likely at 190-160 yuan/mt as sellers remain keen to clear inventories. 


Aluminium: Three-month LME aluminium rebounded on short-covering, hitting a session high of $1,715/mt and closed up 0.18% on the day at $1,702/mt. While a softened US dollar supported aluminium prices, continued concerns about demand will likely keep LME aluminium between $1,680-1,720/mt today. The most-traded SHFE contract is expected to trade at 13,400-13,700 yuan/mt. 


Zinc: Three-month LME zinc declined on Tuesday, slipping to an intraday low of $2,026/mt and finished 0.27% lower on the day at $2,037.5/mt. Sentiment soured on declined in the stock market, as market participants priced-in a potential global spread of the coronavirus. LME zinc inventories shrank 175 mt to 75,200 mt. SMM expects any downside room in zinc prices will be capped on the back of production cut at some Chinese smelters. LME zinc is likely to trade between $2,020-2,070/mt today with the most-liquid SHFE contract at 16,500-17,000 yuan/mt. 


Nickel: Three-month LME nickel regained losses from the prior five consecutive sessions as it broke above pressure from $12,700/mt and hit an intraday high of $12,765/mt, closing up 0.52% on the day at $12,525/mt. The K-indicator remained below all moving averages. Pressure above from the five-day moving average will be monitored today. 


Lead: Three-month LME lead regained losses from the previous session and climbed to an intraday high of $1,860.5/mt, before it retreated and closed $30.5/mt higher on the day at $1,850/mt. 


Tin: Three-month LME tin rose significantly on Tuesday, hitting a session high of $16,765/mt and ended up $220/mt on the day at $16,715/mt. Pressure above is seen from $16,800/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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