SHANGHAI, Apr 28 (SMM) – SHFE base metals, except for aluminium, weakened on Tuesday, erasing gains from the broad rally on Monday, as oil prices continued to slip following an overnight plunge on fears that global storage capacity would soon be full as a result of weak demand caused by the coronavirus pandemic. 

Tin slumped 2.1% on the day to lead the losses, nickel dropped 1.7%, lead fell 1.2%, copper shed 0.6%, and zinc edged down 0.03%. Aluminium bucked the trend and rose for a second straight day, gaining 0.9%. The SHFE will keep its night trading session suspended until May 6.

Their counterparts on the LME were higher for the most part as of 18:22 Beijing time, however.

Signs of progress in re-opening economies and lingering hopes that the Chinese government will push nonferrous metals stockpiling offered support to the market.

Oil prices extended their decline on Tuesday. US West Texas Intermediate for June delivery dropped almost 20% to $10.27 per barrel following a more than 24% decline on Monday. International benchmark Brent crude futures shed 4.4% to $19.07 per barrel.

The US dollar index, which tracks the greenback against a basket of its peers, extended its decline to 99.5.

Southwest China’s Yunnan province on Friday launched the first salvo in metals stockpiling in a bid to prop up the sector, providing 1 billion yuan funds to encourage firms to stockpile up to 800,000 mt of nonferrous metals for one year. Northwest China’s Gansu province is also mulling a similar plan to stockpile 436,000 mt of nonferrous metals for at least seven months.

US consumer confidence index for April will be released at 10 am E.T. on Tuesday. Economist polled by Dow Jones are expecting a read of 92 in April, down from March’s read of 120.

Copper: The most-liquid SHFE June contract fluctuated to close the day at the opening price of 42,300 yuan/mt, down 0.61% due to the lower open. The liquidation of long positions primarily accounted for today’s loss. Ore supply concerns will remain supportive of copper prices.

Aluminium: The most-traded SHFE June contract extended its rally to a six-week peak of 12,515 yuan/mt, shortly before it eased somewhat to end the day 0.93% higher at 12,485 yuan/mt. Upbeat fundamentals supported SHFE aluminium to be the stellar performer among nonferrous metals on the day. The contract is expected to try to stand convincingly above the 12,500 mark tomorrow. In the physical market, spot premiums are expected to remain firm ahead of the Labour Day holiday.

Zinc: The most-traded SHFE June contract climbed after plumbing an intraday low of 15,970 yuan/mt in early morning trade, and clawed back most of earlier losses to close the day a tad weaker at 16,125 yuan/mt. The contract has shrug off resistance at the 60-day moving average, following two consecutive days of short-covering. Traders are rolling to later-dated contracts, narrowing the backwardation on SHFE zinc. But the June contract is expected to remain firm in the near term given positive fundamentals.

Nickel: The most-traded SHFE June contract opened lower and oscillated in a tight range to end the day 1.72% lower at 100,480 yuan/mt. SHFE nickel is expected to continue to hover in a wide range around 100,000 yuan/mt with mixed signals from fundamentals.

The Philippines' top two nickel miners—Nickel Asia Corp NIKL.PS and Global Ferronickel Holdings Inc FNI.PS—reportedly said on Tuesday that they expected to gradually resume mining and shipping operations in Surigao del Norte, the country's main ore-producing region, starting on May 1.

Lead: The most-liquid SHFE June contract slipped 1.22% on the day to end at 13,770 yuan/mt, as fading optimism over pre-holiday stockpiling and slightly wider secondary lead discounts encouraged traders to short SHFE lead. The contract failed to break through the 14,000 mark, and is expected to remain rangebound before deteriorating fundamentals begin to take its toll after the Labour Day holiday.

Tin: The SHFE June contract eased off six-week highs, and its losses accelerated in afternoon trade as longs trimmed their positions. It dropped 2.07% on the day to end at 129,850 yuan/mt, after three consecutive days of substantial gains. The July contract has overtaken the June one to be the most actively traded SHFE tin contract.