SMM Morning Comments (Apr 3): Shanghai base metals opened higher following overnight oil price surge

SHANGHAI, Apr 3 (SMM) – Shanghai base metals, except for tin, opened higher on Friday morning, as oil prices skyrocketed overnight on hopes that Saudi Arabia and Russia could reach a deal.

Their counterparts in London, however, were mostly lower amid lingering worries about the economic fallout from the Covid-19 pandemic which shows no signs of abating.

The total number of infection cases around the world has crossed 1 million, while the number of Americans filing for unemployment benefits spiked to a record-breaking 6.648 million last week.

Overnight on the LME, base metals, except for tin and lead, closed higher. Copper jumped 1.6% on the day to lead the gains, zinc climbed 0.9%, aluminium rose 0.6% and nickel advanced 0.4%. Lead shed 0.2% and tin fell 0.5%.

The SHFE kept its night trading session suspended.

Copper: Three-month LME copper rallied on Thursday and closed at $4,881.5/mt, after a sharp fall on Wednesday.

Aluminium: Three-month LME aluminium rallied from a new four-year trough of $1,481/mt touched in North American trading hours, finishing the day higher at $1,504/mt. The buildup of long positions primarily accounted for the gains on the day. LME aluminium is expected to continue to trade at $1,480-1,530/mt today, while the most active SHFE 2005 contract is expected to rise to 11,400-11,700 yuan/mt. Spot discounts are seen smaller at 40-20 yuan/mt.

Zinc: Three-month LME zinc reversed earlier losses to close the day higher at $1,876/mt, below the 20-day moving average. LME zinc is expected to move at $1,850-1,900/mt today, with the most-traded SHFE May contract at 15,000-15,500 yuan/mt. Spot premiums for domestic 0# Shuangyan are seen stable at 50-80 yuan/mt over the SHFE April contract.

Nickel: Three-month LME nickel dropped to a low of $10,950/mt in early Asian trading hours, within striking distance of a 14-month trough of $10,865/mt plumbed on March 23, before it rallied to close the day higher at $11,300/mt. LME nickel has yet to return above the five-day moving average, and whether it could hold onto the $11,300/mt level will come under scrutiny.

Lead: Three-month LME lead jumped to an intraday high of $1,724/mt following the oil surge in early North American trading hours, before it eased to end the day lower at $1,697/mt. That indicated that LME lead still faces strong pressure amid the pandemic crisis.

Tin: Three-month LME tin hit an intraday high of $14,550/mt in the European trading session, before it erased those gains to close the day lower at $14,355/mt, around the five-day moving average. Support is seen at $14,000/mt.