SMM Morning Comments (Mar 6): Shanghai base metals opened mixed on Friday

SHANGHAI, Mar 6 (SMM) – SHFE nonferrous metals traded mixed on Friday morning, after a broad rally on Thursday amid expectations of more stimulus measures from central banks and governments to counter the economic slowdown amid the coronavirus outbreak. 

But there remained worries about the speed and scale of the virus' spread through to dozens of countries and the potentially crippling blow to the global economy.

LME base metals rose for the most part on a softened US dollar on Thursday, with nickel leading the increases with a 1.7% rise. Zinc climbed 1.33%, tin added 0.5%, lead gained 0.44%, while aluminum fell 0.35% and copper shed 0.42%. The SHFE night trading session remained suspended to contain the virus outbreak.

Copper: Three-month LME copper again relinquished gains from the previous session, ending down 0.42% on the day at $5,671/mt as rising cases of coronavirus in the US clouded market sentiment and spurred risk aversion. Anxieties about the worldwide spread of COVID-19 also depressed the US stock market by more than 3%, while lifted gold prices. Today, LME copper is expected to trade between $5,650-5,710/mt with the most-liquid SHFE contract at 45,100-45,500 yuan/mt. Spot discounts are likely at 110-80 yuan/mt as downstream buyers remain on the sidelines. 

Aluminium: Three-month LME aluminium trimmed some losses after it dipped to a session low of $1,722.5/mt, which remained above the five- and 20- day moving average. It finished the day 0.35% lower at $1717.5/mt, with open interest up 2,625 lots to 744,000 lots as longs loaded up their positions. Today, LME aluminium is expected to hover rangebound between $1,700-1,730/mt, while continued weak fundamentals could keep the most-active SHFE contract at 13,050-13,300 yuan/mt. 

Zinc: Three-month LME zinc climbed to a session high of $2041.5/mt on short-covering, but gave up some increases on intensified coronavirus fears, ending up 1.33% higher on the day at $2,014/mt. LME zinc inventories continued their slide and shrank 126 mt to 74,600 mt. Zinc downstream processors in China have mostly restarted operations, but low operating rates capped the rise in new orders at galvanising plants. LME zinc is seen trading between $1,980-2,030/mt today with the most-active SHFE contract at 15,800-16,300 yuan/mt. 

Nickel: Three-month LME nickel recovered and led the increases among LME base metals after losses in the previous sessions. It climbed to an intraday high of $12,900/mt and closed up 1.7% on the day at $12,895/mt. The five-day moving average lent some support. LME nickel is likely to test support from $12,900/mt today. 

Lead: Three-month LME lead extended its rangebound trend at low levels amid cautious investors as the stock market remained volatile in recent days. LME lead pulled back after hitting an intraday high of $1,847/mt, ending up 0.44% on the day at $1,832/mt. 

Tin: Three-month LME tin held stable above all moving averages on Thursday as it recovered after slipped to a session low of $16,950/mt, and closed $85/mt higher on the day at $17,055/mt. Pressure above is seen from $17,200/mt today.