SMM Evening Comments (Apr 29): Shanghai base metals ended mixed, zinc hit two-month high on supply woes

SHANGHAI, Apr 29 (SMM) – SHFE base metals closed mixed on Wednesday, following a broad decline Tuesday prompted by resumed declines in oil prices. 

Copper regained losses from the previous day with a rebound of 0.5%, and aluminium advanced 1%. Zinc added 1.8% after supply disruptions concerns sent it to the highest level in two months. Lead slipped 0.69%, tin shed 0.76% and nickel dipped 0.4%. The SHFE will keep its night trading session suspended until May 6.

The ferrous complex ended mostly lower as investors worried about supply pressure. Iron ore decreased 0.58%, rebar edged slightly lower, stainless steel shed 0.08%, coke dropped 0.15%, while hot-rolled coil climbed 0.22%. 

Costs for metal delivery in China will rise as the Ministry of Transport has decided to start charging highway tolls again from midnight of May 6, indicating coronavirus is under control and the economy is recovering.

China’s two sessions, the most important annual political event, will be held in late May this year in Beijing, according to official releases on Wednesday.

US oil prices bounced back on Wednesday, erasing some of the weekly losses, as US stockpiles climbed less than expected and investors bet on an increase in demand as some European countries and US cities moved to ease coronavirus lockdowns.

US crude inventories rose by 10 million barrels to 510 million barrels in the week to April 24, data from the American Petroleum Institute (API) showed Tuesday, compared with analysts' expectations for a build of 10.6 million barrels.

Copper: The most-traded SHFE contract jumped to a session high of 42,720 yuan/mt, lifted by a rally in oil prices, before it slipped on loaded-up shorts and finished the day 0.5% higher at 42,510 yuan/mt. Easing coronavirus lockdowns in some parts of the world and continued monetary and fiscal support for economies also supported market sentiment. 

Aluminium: Fundamentals buoyed the most-liquid SHFE June contract to an intraday high of 12,700 yuan/mt before prices ended at 12,585 yuan/mt, 1% higher on the day. Improving domestic demand will likely see the contract between 12,500-12,700 yuan/mt on Thursday. 

Zinc: The most-active SHFE June contract traded robustly Wednesday, rising to the highest level in two months at 16,415 yuan/mt and ending up 1.8% at 16,365 yuan/mt. Longs aggressively loaded up positions on intensified concerns about coronavirus-led mining disruptions. The upward trend will likely continue Thursday. 

Nickel: The most-traded SHFE failed to extend the increase from the early session, as it came off from a session high of 101,480 yuan/mt and fell below the daily moving average to end at 100,150 yuan/mt, 0.4% lower on the day. The contract may hover weakly on the last day before the Labour Day holiday.

Lead: The most-active SHFE June contract faced pressure from the daily moving average, closing 0.69% lower on the day at 13,745 yuan/mt. Fundamentals weakened on limited stockpiling by downstream battery mills. Expectations of significant capacity additions of secondary lead will weigh on prices in May. 

Tin: The most-liquid SHFE June contract declined 20 yuan/mt on the day to finish at 129,830 yuan/mt, with both longs and shorts covering the positions. Support below is seen from 128,000 yuan/mt.