SMM Evening Comments (Apr 8): Shanghai base metals closed mixed; copper rebounded on lingering ore supply concerns

SHANGHAI, Apr 8 (SMM) – SHFE nonferrous metals closed mixed on Wednesday, as copper, aluminium, nickel and tin reversed a pullback at the open.

Nickel jumped 1.9%, tin rose 0.6% and copper gained 0.4%, while aluminim dipped 0.1%, zinc fell 0.8% and lead dropped 1.2%. The SHFE will keep its night trading session suspended.

Most of their counterparts on the LME eased after the European trading session kicked off and were lower on the day.

Eurozone finance ministers failed to reach an agreement Wednesday on how to provide additional stimulus to weather the economic impact of the coronavirus pandemic. 

Copper: SHFE copper held onto three-week highs, supported by a rebound in oil prices on hopes for a production cut deal and recent news of closures or production curtailments at copper mines in response to the local governments’ virus containment measures. The most-traded SHFE May contract hit a new three-week high of 41,020 yuan/mt in afternoon trade, before it pared some gains to close the day 0.39% higher at 40,810 yuan/mt. It has stood above the 20-day moving average and whether it could hit 41,000 yuan/mt will depend on morale among longs.

Aluminium: The most-liquid SHFE June contract rose, recovering losses from a lower open, to close just 0.13% weaker at 11,620 yuan/mt.

Zinc: SHFE zinc failed to reverse earlier losses, as dismal consumption prompted investors to sell at highs. Lingering concerns over ore supply tightness, however, is likely to limit downside to zinc prices. The most-active SHFE June contract fluctuated to end the day 0.82% lower at 15,650 yuan/mt.

Nickel: SHFE nickel climbed, clawing back losses at the open, as longs aggressively loaded up positions and shorts got forced out. The most-traded SHFE June contract jumped 1.92% to close the day at 95,310 yuan/mt, its highest close since March 20. Whether SHFE nickel could stand convincingly above the 20-day moving average will come under scrutiny.

Lead: SHFE lead fell, as investor focus shifted back to fundamentals and longs took profits. In the physical market, premiums for secondary lead over primary lead showed signs of narrowing, as secondary lead supply recovered. The most-active SHFE May contract shed 1.15% to end at 13,715 yuan/mt, prompting the five-day moving average to stage a turnaround. Support at 13,600 yuan/mt will come under scrutiny.

Tin: SHFE tin rallied, reversing an earlier slip, as longs added positions and shorts left. The most-liquid SHFE June contract touched an intraday low of 119,540 yuan/mt in early morning trade, before it finished the day 0.62% higher at 122,100 yuan/mt. Resistance is seen at 123,000 yuan/mt.