SMM Morning Comments (Mar 17): Shanghai base metals fell after Wall Street suffered worst day in 3 decades

SHANGHAI, Mar 17 (SMM) – Shanghai base metals cruised mostly lower in early morning trade on Tuesday, after shares on Wall Street suffered their worst day since the “Black Monday” market crash in 1987 overnight.

London base metals dropped across the board overnight, with copper leading the losses with a 3.1% drop. Tin plunged 2.7% on the day, nickel tumbled 2.4%, zinc slipped 1.1%, lead fell 0.7% and aluminium shed 0.5%.

The SHFE night trading session remained suspended to contain the spread of the virus.

Copper: Three-month LME copper touched a new 40-month low of $5,182.5/mt, before recouping some losses to close at $5,285/mt. Today, LME copper is likely to trade between $5,240-5,300/mt with the most-liquid SHFE 2005 contract at 42,500-43,000 yuan/mt. Quotes in the physical markets are expected to flip into discounts after the delivery of the March contract. Spot discounts are seen at 140-100 yuan/mt.

Aluminium: Three-month LME aluminium rebounded towards the $1,700/mt mark, after touching an intraday low of $1,654/mt. It later eased to end at $1,681/mt. LME aluminium is likely to move between $1,640-1,700/mt today, with the most-active SHFE 2005 contract trading at 12,650-13,000 yuan/mt. Spot discounts are seen at a maximum of 40 yuan/mt against the SHFE 2004 contract.

Zinc: Three-month LME zinc recovered somewhat after slipping to an intraday low of $1,930.5/mt, and ended at $1,960/mt. It remains under pressure from the five- and 10-day moving averages, but supported by the lower Bollinger band. Zinc stocks across LME-approved warehouses extended their decline, decreasing 475 mt, or 0.64% to 74,125 mt on Monday. LME zinc is expected to trade at $1,930-1,980/mt today with the most-traded SHFE May contract hovering between 15,400-15,900 yuan/mt. Spot premiums for domestic 0# Shuangyan are seen at 10-20 yuan/mt over the SHFE April contract.

Nickel: Three-month LME nickel plumbed a new nine-month trough of $11,670/mt, before it clawed back some losses to end at $12,010/mt. Whether it could remain above $12,000/mt will come under scrutiny in the near term.

Lead: Three-month LME lead slipped to its lowest since June 2016 at $1,682.5/mt, before recovering some ground to finish the day at $1,740/mt. Concerns about the rapid spread of the virus has put LME lead on a downtrend.

Tin: Three-month LME tin plumbed its lowest in more than four years at $15,150/mt, before clawing back some losses to end at $15,370/mt, further away from moving averages. Support is seen at $15,000/mt.