SMM Morning Comments (Mar 18): London base metals rebounded after Tuesday’s sharp losses

SHANGHAI, Mar 18 (SMM) – London base metals cruised higher across the board in early morning trade on Wednesday, rebounding from sharp losses on Tuesday.

Following overnight plunges in London base metals, Shanghai base metals opened broadly lower.

LME base metals closed sharply lower overnight, with tin diving 7.9% on the day to lead the losses. Lead plunged 6.6%, zinc dropped 3.4%, copper sank 2.7%, aluminium fell 2.3%, and nickel lost 0.8%. The SHFE night trading session remained suspended to contain the spread of the virus.

A plunge in oil prices and surge in the US dollar trumped hopes for more stimulus measures, weighing on base metals overnight.

Copper: Three-month LME copper extended its losses to a new 40-month low of $5,127/mt, shortly before closing the day at $5,145/mt. Today, LME copper is likely to trade between $5,150-5,200/mt with the most-liquid SHFE 2005 contract at 41,500-42,000 yuan/mt. Spot discounts are seen steady at 120-100 yuan/mt, as sellers and buyers remain cautious in the falling market.

Aluminium: Three-month LME aluminium rebounded somewhat in North American trading hours from sharp losses in European trading hours. It later eased again, returning to its lowest since October 2016 at $1,639/mt and ended at $1,643/mt. The unwinding of long positions primarily accounted for the plunge in LME aluminium on Tuesday. It is likely to move between $1,640-1,700/mt today, with the most-active SHFE 2005 contract trading at 12,600-12,900 yuan/mt. East China spot discounts are seen at 90-70 yuan/mt against the SHFE 2004 contract.

Zinc: Three-month LME zinc reversed a mild rebound to its lowest since May 2016 at $1,874/mt in overnight trading, before recovering some ground to end at $1,894/mt. It remained above the lower Bollinger band. Zinc stocks across LME-approved warehouses extended their decline, decreasing 125 mt, or 0.17% to 74,000 mt on Tuesday. LME zinc is expected to trade at $1,870-1,920/mt today with the most-traded SHFE May contract hovering between 15,000-15,500 yuan/mt. Spot premiums for domestic 0# Shuangyan are seen at 20-30 yuan/mt over the SHFE April contract.

Nickel: Three-month LME nickel eased again in overnight trading after recovering to levels at opening bell. It ended the day at $11,910/mt. LME nickel hovered around $12,000/mt, with resistance at the five-day moving average and support at the lower Bollinger band.

Lead: Three-month LME lead dived to its lowest since January 2016 at $1,617.5/mt in overnight trading, before finishing the day at $1,626/mt. Concerns about the rapid spread of the virus are expected to deter LME lead from staging a substantial rally in the short term.

Tin: Three-month LME tin plunged in European trading hours, plumbing its lowest in more than four years at $14,100/mt, before ending at $14,155/mt, further away from moving averages. Support is seen at $14,000/mt.