SMM Morning Comments (Mar 5): Shanghai base metals traded mixed on Thursday morning

SHANGHAI, Mar 5 (SMM) – SHFE nonferrous metals traded mixed on Thursday morning, as concerns resurfaced that the coronavirus could pose evolving risks to the global economic activity despite the US Federal Reserve cutting interest rates in support of the market. 

LME base metals declined for the most part last night, with lead leading the losses with a drop of 0.65%. Zinc slipped 0.05%, nickel lost 0.04%, aluminum fell 0.26%, while copper added 0.62%, and tin climbed 1.53%. The SHFE night trading session remained suspended to contain the virus outbreak.

Copper: Three-month LME copper recovered from losses in the previous session and closed higher at $5,695/mt, supported by stabilising sentiment around the coronavirus outbreak overseas and a rebound in the US stocks market. Upbeat job and non-manufacturing data from the US suggested underlying strength in the economy despite the COVID-19 outbreak, and this also supported copper prices. Today, LME copper is expected to trade between $5,670-5,730/mt with the most-active SHFE contract at 45,200-45,550 yuan/mt. Spot discounts are likely at 120-80 yuan/mt, limitedly changed from the prior day as sellers and buyers remain in a deadlock. 

Aluminium: Three-month LME aluminium slipped to as low as $1,717/mt overnight before easing some losses and ending down 0.26% on the day at $1,723.5/mt. Limited improvement in fundamentals kept aluminium prices under pressure. LME aluminum is expected to trade between $1,705-1,750/mt with the most-traded SHFE contract at 13,050-13,300 yuan/mt today. 

Zinc: Three-month LME zinc pulled back after climbed to a session high of $2,010/mt, closing slightly lower on the day at $1,987.5/mt. Support below was seen from the Bollinger lower band. LME zinc inventories extended their slide by 300 mt to 74725 mt. Today, trading range is expected at $1,970-2,020/mt with that of the most-liquid SHFE contract at 15,800-16,300 yuan/mt. 

Nickel: Three-month LME nickel hovered in a broad band with pressure from the 20-day moving average and the Bollinger middle band, finishing 0.04% lower on the day at $12,680/mt after dipping close to the lowest level on Tuesday at $12,610/mt. Pressure above should be monitored today. 

Tin: Three-month LME tin closed significantly higher on the day at $16,970/mt after rising to a session high of $17,160/mt. The 40-day moving average lent some support. LME tin is expected to face resistance above from $17,200/mt.