SMM Morning Comments (Mar 24): Base metals opened broadly higher; Shanghai copper jumped more than 5%

SHANGHAI, Mar 24 (SMM) – London and Shanghai base metals traded higher across the board in early morning trade on Tuesday, as the US Federal Reserve announced aggressive asset purchases to combat the economic impact of the global coronavirus outbreak.

The Fed’s announcement gave a lift to oil prices, while pulled the US dollar away from three-year highs against a basket of currencies.

Shanghai copper and tin jumped more than 5% after the opening bell, while gold and silver hit their “limit high” levels.

Overnight on the LME, base metals closed lower across the board. Nickel dived 3.7% on the day to lead the losses, tin tumbled 2.8%, copper plunged 2.1%, zinc dropped 1.5%, lead fell 1.2% and aluminium slipped 1.1%.

The SHFE kept its night trading session suspended.

US stocks fell sharply overnight as US lawmakers failed to push through massive fiscal stimulus to curtail the economic blow from the coronavirus.

Copper: Three-month LME copper climbed back above $4,600/mt on Monday, erasing losses from a lower open, but still finished the day lower at $4,601/mt. LME copper is expected to move between $4,620-4,680/mt today, with its SHFE counterpart at 37,000-37,600 yuan/mt.

Aluminium: Three-month LME aluminium rebounded to an intraday high of $1,580/mt after plumbing its lowest since June 2016 at $1,538.5/mt in late Asian trading hours. It later eased to end the day lower at $1,560/mt, with the buildup of short positions primarily accounting for the loss. LME aluminium is expected to move between $1,540-1,600/mt today, with the most-active SHFE 2005 contract trading at 10,800-11,800 yuan/mt. East China spot discounts are seen at 80-60 yuan/mt against the SHFE 2004 contract.

Zinc: Three-month LME zinc closed lower at $1,818/mt overnight after a volatile trading session. It remains under pressure at the five- and 10-day moving averages, but supported by the lower Bollinger band. LME zinc is expected to trade at $1,790-1,840/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 unchanged at 20-40 yuan/mt over the SHFE April contract.

Nickel: Three-month LME nickel slid to its lowest since 2019 at $10,865/mt in North American trading hours, before ending the day lower at $10,915/mt. LME nickel has fallen below the lower Bollinger band, and whether it could return above $11,000/mt today will come under scrutiny.

Lead: Three-month LME lead dropped to an intraday low of $1,580/mt in North American trading hours, within striking distance of a 4-1/2-year trough of $1,570/mt plumbed last week. It later recouped some losses to end the day lower at $1,616/mt. LME lead is likely to weaken further, as the pandemic outbreak outside China is not under control yet.

Tin: Three-month LME tin plumbed a new more than one-decade trough of $12,700/mt in early Asian trading hours, as its SHFE counterpart tumbled. It later rebounded above the five-day moving average to an intraday high of $13,825/mt, before easing to end the day lower at $13,180/mt. Support is seen at $13,000/mt, with next support at $12,500/mt.