SMM Morning Comments (Mar 9): Shanghai base metals opened lower on Monday as crude prices tumbled

SHANGHAI, Mar 9 (SMM) – SHFE nonferrous metals opened lower across the board on Monday March 9, on the back of slumps in the US stock futures and crude oil prices as fears of a global oil-price war and concerns about the coronavirus impact rattled traders.

LME base metals fell for the most part last Friday, with aluminium leading the declines with a drop of 1.86%. Tin slipped 1.73%, zinc fell 1.29%, nickel shed 0.47%, copper lost 0.71%, while lead climbed 0.38%. The SHFE night trading session remained suspended to contain the virus outbreak. 

Copper: Three-month LME copper broke down $5,600/mt to hit a session low of $5,592.5/mt last Friday, weighed by uncertainties around the economic impact of the fast-spreading coronavirus and a plunge in oil prices after major oil producers failed to agree on production cuts. Upbeat non-far payrolls data from the US was outweighed by macroeconomic risk aversion sentiment, and limitedly supported copper prices. Today, LME copper is expected to trade between $5,550-5,610/mt with the most-traded SHFE contract at 44,300-44,700 yuan/mt. Spot discounts are seen at 60-20 yuan/mt on expectations of improvements in downstream demand. 

Aluminium: Three-month LME aluminium lost 1.86% last Friday and finished at $1685.5/mt, with US stock futures and crude oil prices slumping over the weekend. Trading range is expected at $1650-1720/mt today, with the most-liquid SHFE contract at 12,600-13,000 yuan/mt. 

Zinc: Three-month LME zinc declined to a session low of $1,976.5/mt but pares some losses with support from the Bollinger lower band, ending down 1.29% on the day at $1,988/mt. Macroeconomic uncertainties and gradual recovery of operating rates for small and medium-scale firms in China will likely keep LME zinc between $1970-2020/mt today, with the most-active SHFE contract hovering between 15,800-16,300 yuan/mt. 

Nickel: Three-month LME nickel consolidated in a broad band around $12,800/mt last Friday, and closed down 0.47% on the day at $12,835/mt. Pressure above is seen from $12,900/mt today. 

Lead: Three-month LME lead recovered its early losses as it bounced back to an intraday high of $1,864/mt after slipped to a low of $1,822/mt. It closed up 0.38% on the day at $1,839/mt, outperforming other base metals. It is expected to trade with support from $1,800/mt today.  

Tin: Three-month LME tin fell significantly to a session low of $16,745/mt before it finished $295/mt lower on the day at $16,760/mt. Support below is expected at $16,600/mt today.