SMM Morning Comments (Mar 19): Base metals tumbled across the board; Shanghai copper, tin hit ‘limit down’ again

SHANGHAI, Mar 19 (SMM) – London and Shanghai base metals tumbled across the board in early morning trade on Thursday, with Shanghai copper and tin plunging 9% to hit their daily “limit-down” for a second straight day.

On Wednesday, LME base metals extended their decline for the most part, with copper diving nearly 8% on the day to lead the losses. Nickel plunged 4.4%, tin tumbled 3.6%, zinc sank 1.9%, and aluminium shed 0.3%. Lead bucked the trend to gain 1.8%.

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

Overnight, US stocks triggered a “circuit breaker” for the fourth time in a week, crude prices plummeted to lows in about two decades, while the US dollar rose above the 100-mark against a basket of currencies.

Copper: Three-month LME copper extended its losses to its lowest since October 2016 at $4,681/mt, before finishing the day sharply lower at $4,734/mt. Today, LME copper is likely to trade between $4,600-4,700/mt with the most-liquid SHFE 2005 contract at 37,500-38,100 yuan/mt. Spot discounts are seen slightly narrower to 100-80 yuan/mt, as sellers hold back on making quotation after Shanghai copper futures hit daily limit-down for a second straight day.

Aluminium: Three-month LME aluminium rebounded in European and North American trading hours, rising from a new 41-month low of $1,613/mt to end at $1,638.5/mt. It is likely to move between $1,600-1,650/mt today, with the most-active SHFE 2005 contract trading at 12,100-12,600 yuan/mt. East China spot discounts are seen at 60-40 yuan/mt against the SHFE 2004 contract.

Zinc: Three-month LME zinc plumbed its lowest in nearly four years at $1,814/mt in North American trading session, before clawing back some losses to end the day at $1,859/mt. It has yet to lose support at the lower Bollinger band. Zinc stocks across LME-approved warehouses extended their decline, decreasing 725 mt, or 0.98% to 73,275 mt on Wednesday. Zinc prices are expected to remain weak before there are signs of a turning point for the pandemic outbreak outside China. LME zinc is expected to trade at $1,830-1,880/mt today with the most-traded SHFE May contract hovering between 14,800-15,300 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 slipped to 14-month lows before ending the day at $11,385/mt. It has fallen below the lower Bollinger band and the five-day moving average. Pressure at $11,500/mt will come under scrutiny in the near term.

Lead: Three-month LME lead rallied after plumbing a 4-1/2-year trough of $1,570/mt in late Asian trading session, to close the day higher at $1,655.5/mt, stemming recent declines.

Tin: Three-month LME tin plunged to its lowest since January 2016 at $13,200 in North Americant trading hours, before it recovered some ground to close at $13,650/mt. Support is seen at $13,000/mt, as the contract has lost support from all near-term moving averages.