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SMM Morning Comments (Apr 10): Shanghai base metals moved higher after OPEC+ agreed to historic production cut; Tin jumped more than 3%
Apr 10,2020 10:09CST
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Source:SMM
SHFE base metals drifted mostly higher in early morning trade on Friday, after OPEC and its allies, known as OPEC+, on Thursday agreed to historic production cuts that will take 10 million barrels per day offline. Tin jumped more than 3% at one point, tracking Thursday’s substantial gains in its LME counterpart.

SHANGHAI, Apr 10 (SMM) – SHFE base metals drifted mostly higher in early morning trade on Friday, after OPEC and its allies, known as OPEC+, on Thursday agreed to historic production cuts that will take 10 million barrels per day offline.

 

Tin jumped more than 3% at one point, tracking Thursday’s substantial gains in its LME counterpart.

 

The LME will be closed Friday and next Monday for Good Friday and Easter Monday.

 

Despite the record size of the cut, oil prices pared earlier gains to lower on Thursday as investors feared it would still not be enough to combat the unprecedented demand loss from the coronavirus.

 

US stocks rose sharply on Thursday, while the US dollar index dropped to one-week lows, after the Federal Reserve detailed a bevy of programs to support the economy during the shutdowns from the coronavirus pandemic.

 

The central bank’s announcement trumped another massive jump in US weekly jobless claims. More than 6 million Americans filed for unemployment benefits last week, building on the record-shattering prior two readings of 6.6 million and 3.3 million.  

 

Overnight on the LME, base metals, except for zinc, closed higher. Tin resumed its rally, rising 3.4% on the day to be the biggest gainer, nickel jumped 1.7%, aluminium climbed 1%, lead advanced 0.6%, and copper gained 0.2%. Zinc shed 0.3%.

 

SHFE base metals, except for zinc and lead, closed higher on Thursday, and the night trading session remained suspended.

 

Copper: A rally in the North American trading session sent three-month LME copper back to the green, which ended the day 0.19% higher at $5,032/mt. LME copper gained 3.92% on the week, registering a three-week winning streak. Concerns about ore supply lent strong support to copper prices. A Reuters report Thursday said that MMG Ltd has declared force majeure on copper concentrate supplies from its Las Bambas mine in Peru. SHFE copper is expected to move between 40,300-40,800 yuan/mt today. Spot premiums are seen at 80-120 yuan/mt, and trades are likely to improve as SHFE copper dipped at the open.

 

Aluminium: Three-month LME aluminium rallied in the North American trading session, recovering from earlier losses to finish the day 1.02% higher at $1,484/mt. It advanced 0.27% on the week, taking a breather from the downtrend that began at the start of 2020. LME aluminium declined for 13 weeks in the past 15 weeks.

 

Zinc: Three-month LME zinc eased to intraday lows of $1,896/mt in the European trading session, giving back earlier gains, and finished the day 0.26% lower at $1,909/mt. LME zinc remained around the middle Bollinger band and supported by the five- and 10-day moving averages. It strengthened 1.43% on the week, marking a third straight week of gain.

A large number of deliveries arrived at LME warehouses in recent two days, with stocks jumping nearly 30% to 97,975 mt. That, together with supply increase in China, is likely to hurt market sentiment.

The SHFE 2006 contract is expected to trade at 15,100-15,600 yuan/mt today. Spot premiums for domestic 0# Shuangyan are seen stable at 60-80 yuan/mt over the SHFE May contract.

 

Nickel: Three-month LME nickel climbed to its highest since March 18 at $11,705/mt in North American trading hours, before it ended at $11,700/mt, up 1.65% on the day. LME nickel rose for four consecutive days to produce a weekly gain of 4.46%, near the middle Bollinger band.

 

Lead: Three-month LME lead saw wider swinging range in European and North American trading hours, and finished the day 0.55% higher at $1,725/mt. It gained 3.92% on the week, its biggest weekly percentage increase since October 2019. LME lead may move out of its recent range, with strong technical support, but weak fundamentals outside China will limit upward momentum.

 

Tin: Three-month LME tin surged to its highest in more than three weeks at $15,120/mt in European trading hours. It later erased some gains to close the day 3.39% higher at $14,950/mt, notching a weekly gain of 5.84%, its biggest weekly percentage gain since September 2019. LME tin now stands convincingly above the five-day moving average. It is likely to test $15,000/mt, with next resistance at the 40-day moving average at $15,500/mt.

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