SMM Morning Comments (Apr 23): Shanghai base metals opened Thursday higher across the board as oil prices stabilised

Published: Apr 23, 2020 09:41 (GMT+8)

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SHFE nonferrous metals traded higher across the board on Thursday morning, recovering some losses in the previous day, as investors gained some confidence from stabilising crude oil markets.

SHANGHAI, Apr 23 (SMM) – SHFE nonferrous metals traded higher across the board on Thursday morning, recovering some losses in the previous day, as investors gained confidence from stabilising crude oil markets.

All Shanghai base metals advanced more than 1% in early trades, with copper adding over 2% and tin climbing as much as 2.6%.

Overnight, LME base metals closed mixed after an oil price rebound soothed market sentiment. Aluminium led the gains with a rise of 2.01%. Copper advanced 1.63%, tin added 0.17%, while nickel slumped 1.81%, zinc dipped 0.52%, and lead shed 0.03%.

US stocks rallied Wednesday, ending higher for the first time in three days. Investors sentiment also improved amid expectations for US Congress to roll out another fiscal stimulus package.

Copper: Three-month LME copper halted its slide and bounced back above $5,100/mt to a session high of $5,137/mt on Wednesday, after increased US-Iran tensions and declines in US crude output prompted a rebound in oil prices from a 21-year low. Supply tightness will remain supportive of copper prices, with LME copper likely trading at $5,120-5,180/mt today. The most-active SHFE copper contract may hover between 41,800-42,300 yuan/mt. Spot premiums will likely stabilise at 170-200 yuan/mt as higher quotes could sideline downstream consumers.

Aluminium: Three-month LME aluminium moved higher with a strengthened SHFE aluminium, ending at $1,520/mt on Wednesday, up 2.01% on the day. The K-indicator broke up the 20-day moving average. Today, LME aluminium is expected to trade between $1,490-1,520/mt with the most-active SHFE contract at 12,000-12,250 yuan/mt.

Zinc: Three-month LME zinc relinquished early gains as it came off after hitting a session high of $1,924.5/mt, ending down 0.52% on the day at $1,899/mt. LME zinc inventories shrank for the fifth consecutive session on Wednesday, falling 250 mt, or 0.26%, to 97,600 mt. Anticipations of more stimulus measures from the US and European Union may lend some support to market confidence, keeping LME zinc between $1,880-1,930/mt. Continued declines in domestic inventories will support the most-active SHFE June contract at 15,500-16,000 yuan/mt.

Nickel: Three-month LME nickel declined for the second straight day, ending down 1.81% on the day at $11,940/mt after a weakened SHFE nickel weighed it to a session low of $11,795/mt. The K-indicator remained between the 40- and 60- day moving averages. Today, support from the 10- and 40- day moving averages will be monitored.

Lead: Three-month LME lead traded in a relatively narrow range, recovering from a session low of $1,649.5/mt and ending the day 0.03% lower at $1,662/mt. It is expected to test support from $1,630/mt today.

Tin: Three-month LME tin traded steadily Wednesday, as it rallied from an intraday low of $14,600/mt and finished at $14,865/mt, $25/mt higher on the day. LME tin inventories decreased 80 mt on the day to 6,325 mt. Today, pressure above is seen from $15,000/mt, with support below from $14,500/mt.

Morning comments Futures movement Copper Aluminium Zinc Nickel Lead Tin

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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