SMM Morning Comments (Apr 24): Shanghai base metals opened mixed Friday, nickel extended rally

SHANGHAI, Apr 24 (SMM) – SHFE nonferrous metals traded in a mixed note on Friday morning, following a broad rally in the prior session.

Nickel extended its upward trend and climbed more than 2%. The Philippines has announced to extend until May 15 the lockdown of its capital region and nearby areas as it tries to stem the coronavirus outbreak. The lockdown extension covers Zambales, one of the main mining areas of medium-to-high nickel ore in the Philippines.

SMM expects 2-3 vessels of nickel ore shipments from Zambales to be affected, and deliveries from other regions of the Philippines could resume on May 1. 

Shanghai copper held onto gains from Thursday and continued to move higher, and tin also increased by around 1% in early trades on Friday. 

Overnight, LME base metals closed mixed with nickel as the best performer, adding 2.05%. Copper advanced 0.6%, tin climbed 0.77%, while aluminium shed 0.66%, zinc lost 1.29% and lead slipped 0.96%. 

US crude futures for June delivery surged 19.7% to settle at $16.50/barrel amid increasing bets for a US production cut. Thursday’s gains brought oil’s two-day increase to more than 40%.

Aluminium: Three-month LME aluminium trimmed some declines during the European trading hours, as it bounced back from a session low of $1,503/mt, closing 0.66% lower on the day at $1,510/mt. Loaded-up shorts accounted for the slide. Trading range is expected at $1480-1520/mt today with the most-liquid SHFE contract hovering at 12,050-12,450 yuan/mt. Spot premiums are seen at 40-60 yuan/mt. 

Zinc: Three-month LME zinc dived following a surge in LME zinc inventories, slipping to an intraday low of $1,865.5/mt and finished at $1,874.5/mt, down 1.29% on the day. LME zinc inventories jumped 2475 mt, or 2.54% on Thursday to 100,075 mt, on the backdrop of weak consumption caused by the coronavirus pandemic. The eurozone stimulus uncertainty also dampened investors confidence and weighed on zinc prices. Today, LME zinc will likely trade between $1,850-1,900/mt with the most-active SHFE contract trading at 15,500-16,000 yuan/mt. 

Nickel: Three-month LME nickel recovered all losses from the early session as it broke above the 60-day moving average to finish at $12,185/mt, 2.05% higher on the day. The K-indicator remained between the 40- and 60- day moving averages. Trading range for LME nickel today is expected between the five- and 10- day moving averages. 

Lead: Three-month LME lead extended a downward trend overnight and losing 0.96% on the day to end at $1,646/mt. It is seen testing support below from $1,630/mt in the short term. 

Tin: Three-month LME tin retreated after climbed to a session high of $15,325/mt, ending the day $115/mt higher at $14,980/mt. Pressure above is seen from the 60-day moving average, or $15,600/mt today.