SMM Evening Comments (Apr 21): Shanghai base metals closed mostly lower; Brent crude plunged to 18-year low

SHANGHAI, Apr 21 (SMM) – SHFE nonferrous metals, except for lead and nickel, closed lower on Tuesday, as oil prices plunged after the May US crude futures prices turned negative for the first time in history overnight.

Zinc slumped 2.9%, copper tumbled 2.3%, tin dropped 2.1% and aluminium fell 2% from their settlement prices on Monday, and shed 3.1%, 2.1%, 2.1% and 1.9% from the previous day’s closing prices, respectively, marking their biggest one-day percentage losses since May 23 when global markets were significantly rattled by uncertainty surrounding the coronavirus pandemic.

Lead inched up 0.1% from Monday’s settlement price, while nickel rose 0.3%. The SHFE will keep its night trading session suspended.

On the LME, base metals were broadly lower on the day as of 18:28 Beijing time, and zinc, tin and copper were down more than 2%.

West Texas Intermediate (WTI) crude futures for May delivery, which expires Tuesday, returned to negative prices in the afternoon of Asian trading hours on Tuesday, following a brief recovery after Monday’s 100% wipeout. International benchmark Brent crude futures plummeted nearly 30% to $18.1 per barrel, its lowest in almost two decades.

Copper: The most-liquid SHFE June contract opened lower and slipped to an intraday low of 41,400 yuan/mt in early morning trade. It later hovered in a tight range to end the day 2.26% lower at 41,440 yuan/mt. Jitter caused by the collapse of oil prices was partially countered by lingering concerns over copper supply crunch, as China’s official data showed that the country’s refined copper output fell 2.5% year on year in March to the lowest since May 2019. Today’s plunge wiped out price gains from the previous two sessions, sending the contract below the 40-day moving average.

Aluminium: The most-traded SHFE June contract touched an intraday low of 12,005 yuan/mt in afternoon trade, before it clawed back some losses to close the day nearly 2% lower at 12,105 yuan/mt. The contract erased gains from the two previous sessions, but stabilised costs, stable supply, robust demand recovery, firm spot premiums and backwardation on the SHFE aluminium will deter the June contract from falling below the 10-day moving average in the short term.

Zinc: The exodus of longs knocked the most-traded SHFE June contract to its lowest in more than a week at 15,535 yuan/mt, near the 60-day moving average, in afternoon trade, before the contract recouped some losses to close the day 2.86% lower at 15,635 yuan/mt. With positive fundamentals, SHFE zinc is likely to resume its rally after a brief correction.

Nickel: The most-traded SHFE June contract notched a new nearly six-week high of 102,500 yuan/mt in early morning trade, before it gave back most of those gains to close the day 0.29% higher at 100,920 yuan/mt. The contract retreated to the 100,000 mark, but remains above the 60-day moving average.  

Lead: The most-liquid SHFE June contract fluctuated in a wide range to finish the day 0.11% firmer at 13,620 yuan/mt. The five- and 10-day moving averages have morphed into a death cross, while support lingers at 13,500 yuan/mt. Demand and supply were both weak in the physical market. SMM will release weekly China lead ingot inventory data on Friday, which is likely to post an increase after several weeks of declines and provide a direction for the market.

Tin: The most-traded SHFE June contract tumbled 2.12% on the day to end at 125,530 yuan/mt. The contract now resides around the five-, 10- and 40-day moving averages, and support is seen at 122,000 yuan/mt, the low-end of its recent trading range.