SMM Morning Comments (Mar 20): Base metals mixed in volatile trading; London tin plumbed a new one-decade low

SHANGHAI, Mar 20 (SMM) – Shanghai base metals were higher for the most part in early morning trade on Friday, while most of their counterparts on the London Metal Exchange were mixed.

LME tin dived more than 7% to a new more than one-decade trough, while its SHFE counterpart plunged nearly 5% to its lowest in close to four years.

On Thursday, LME base metals recovered steep losses from Asian trading hours to close mixed. Copper jumped 1.6% on the day, and tin gained 0.4%, while lead dropped 1%, nickel fell 0.8%, zinc shed 0.7% and aluminium lost 0.6%.

The Shanghai Futures Exchange kept its night trading session suspended to contain the spread of the virus, even as China reported no new domestic cases on Thursday.

Overnight, US stocks and crude prices rebounded, while the US dollar rose for a third straight day to its highest since January 2017.

Copper: Three-month LME copper fell to its lowest since January 2016 at $4,371/mt in early Asian trading session, before it rallied to finish the day substantially higher at $4,810/mt. The announcement of mine production curtailments in Chile and Peru, a rebound in oil prices and stocks bolstered copper prices, while the strong US dollar, which stayed at more than three-year highs against a basket of currencies, weighed. Today, LME copper is likely to trade between $4,600-4,750/mt with the most-liquid SHFE 2005 contract at 37,500-38,200 yuan/mt. Spot premiums are seen at 20-60 yuan/mt, while trades are likely to pick up if Shanghai futures prices rally after hitting limit down for a second time in a week on Thursday.

Aluminium: Three-month LME aluminium touched its lowest since September 2016 at $1,579.5/mt in the final minutes of Asian trading session. It clawed back some losses later in the day to end lower at $1,629.5/mt. It is likely to move between $1,580-1,630/mt today, with the most-active SHFE 2005 contract trading at 11,400-12,000 yuan/mt. East China spot prices are seen flat with the SHFE 2004 contract.

Zinc: Three-month LME zinc plummeted to its lowest since April 2016 at $1,763/mt in early Asian trading hours, before it recovered some ground to close the day at $1,846.5/mt. It remains under pressure at the five- and 10-day moving averages, but supported by the lower Bollinger band. Zinc stocks across LME-approved warehouses rebounded, increasing 425 mt, or 0.58% to 73,700 mt on Thursday. Zinc prices are expected to remain weak before there are signs of a turning point for the pandemic outbreak outside China, and given the stronger US dollar. LME zinc is expected to trade at $1,840-1,890/mt today with the most-traded SHFE May contract hovering between 14,400-14,900 yuan/mt. Spot premiums for domestic 0# Shuangyan are seen at 60-80 yuan/mt over the SHFE April contract.

Nickel: Three-month LME nickel closed lower at $11,295/mt, after fluctuating for much of the day. The range of swinging narrowed in North American trading hours. Whether it could stabilise and remain above $11,000/mt will come under scrutiny.

Lead: Shorts dealt a blow to three-month LME lead in North American trading hours, pulling it from an intraday high of $1,687/mt hit in European trading hours to close in the red at $1,638.5/mt.

Tin: As SHFE tin hit its daily limit-down, three-month LME tin dived its lowest since July 2009 at $1,300/mt in early Asian trading hours. It later recouped all those losses to close the day higher at $13,700/mt.