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SMM Morning Comments (May 7): Shanghai base metals held onto gains from overnight, nickel added 2%
May 7,2020 10:00CST
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Source:SMM
SHFE nonferrous metals, except for tin, traded higher on Thursday morning, following a broad rally in the previous session. Nickel remained the best performer with a rise of more than 2%. Copper, aluminium and tin edged up with zinc and lead adding over 1%. 

SHANGHAI, May 7 (SMM) – SHFE nonferrous metals traded higher on Thursday morning, following a broad rally in the previous session


Nickel remained the best performer with a rise of more than 2%. Copper, aluminium and tin edged up with zinc and lead adding over 1%. 


Base metals mostly strengthened during Wednesday’s night trading session, which resumed for the first time after the Chinese New Year holiday as the spread of the coronavirus has stalled domestically. 


Nickel advanced 2.42%, copper climbed 0.45%, zinc went up 1.34%, lead increased 1.02%, while tin and aluminium inched down. Rebar added 0.68% and stainless steel rose 1.96%.


LME base metals ended higher for the most part overnight, with zinc leading the gains with a rise of 3.49%. Copper added 0.82%, nickel climbed 2.54%, tin edged up 0.1%, while aluminum shed 0.5% and lead aliped 0.27%.


Oil futures settled lower Wednesday, with the US benchmark snapping a five-session streak of gains, weighed by concerns over tightening storage capacity even though weekly crude inventories rose less than expected and domestic production fell.


Copper: Three-month LME copper continued to rebound overnight, lifted by a strengthened SHFE copper, returning above $5,200/mt. It trimmed some gains near closing, ending up 0.82% on the day, as the US dollar rose on increased safe-haven demand. Support from the oil market also faded as crude oil futures snapped its five-session streak of gains on remerged worries about the capacity shortage. Today, LME copper is seen trading between $5,180-5,230/mt with the most-active SHFE contract at 42,500-42,900 yuan/mt. Spot premiums are likely at 130-160 yuan/mt. 


Aluminium: Three-month LME aluminium came off after climbed, closing down 0.5% on the day at $1,482.5/mt. Concerns about the strength of demand recovery may limit any upward momentum in LME aluminium. The most-liquid SHFE June contract, meanwhile, extended its increase from a week ago as falling domestic inventories suggested healthy consumption. It is expected to trade between 12,600-12,900 yuan/mt today with LME aluminium at $1,470-1,500/mt. 


Zinc: Three-month LME zinc rose a significant 3.49% on optimism that demand will pick up as more economies are moving toward easing lockdowns. It broke up pressure from the Bollinger upper band and the 60-day moving average, with LME zinc inventories dipping 250 mt, or 0.25% to 100,425 mt. The impact of easing lockdown measures on mining operations will be closely monitored. The most-liquid SHFE July contract closed up 1.34% last night at 16,605 yuan/mt, with trading range today expected at 16,300-16,800 yuan/mt and LME zinc at $1,950-2,000/mt. 


Nickel: Three-month LME nickel followed SHFE nickel and stainless steel prices higher overnight, rising to a session high of $12,400/mt before ending at $12,335/mt, up 2.54% on the day. Loaded-up longs buoyed the most-active SHFE contract to an intraday high of 102,320 yuan/mt and settled it at 102,130 yuan/mt. The K-indicator had moved above the five- and 10- day moving averages. 


Lead: Three-month LME lead extended its rangebound trend at low levels, finishing 0.27% lower on the day at $1,637/mt. The most-liquid SHFE contract traded higher during the first night trading session post-CNY holiday, and may continue to test pressure above from 14,000 yuan/mt. Nonetheless, investors remain cautious about any further upside potential. 


Tin: Three-month LME tin recovered early losses as it bounced back from a session low of $14970/mt, ending slight higher on the day at $15,195/mt. It is expected to test support from $15,000/mt today with the most-active SHFE July contract facing pressure from 130,000 yuan/mt. 

 

 

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