SMM Morning Comments (Feb 10): Shanghai base metals opened lower on Monday

SHANGHAI, Feb 10 (SMM) – SHFE nonferrous metals opened the Monday trading session lower across the board as the impact of coronavirus dampened the prospects for downstream demand recovery. 

LME base metals closed lower last Friday. Copper lost 1.52%, aluminium fell 1.12%, zinc dropped 2.53%, nickel slipped 2.06%, tin dipped 2.43%, lead went down 1.68%. The SHFE has halted its night trading session since last Monday to control the coronavirus outbreak.

Copper: Elevated US dollar on upbeat US non-farm payroll data, coupled with reemerged risk aversion on fears about escalated coronavirus weighed on three-month LME copper last Friday, which slipped 1.52% to close at $5,655/mt, trimming increase from the prior three sessions. But market sentiment is expected to improve due to an absence of risk events over the weekend, with a decline in additions of confirmed cases in most areas. Technical support is expected to keep three-month LME copper between $5,650-5,710/mt today, with the most-traded SHFE contract at 45,600-46,000 yuan/mt. Uncertainties around the return of downstream producers may keep spot offers between flat to a premium of 50 yuan/mt.

Aluminium: Three-month LME aluminium pared some losses after slipped to an intraday low of $1,706.5/mt on loaded-up shorts, ending down 1.12% on the day at $1,721/mt. Its trading range today is expected to widen to $1,700-1,760/mt, with the most-active SHFE contract hovering at 13,500-13,800 yuan/mt.  

Zinc: Three-month LME zinc dropped 2.53% last Friday night to finish at $2,158/mt, after LME zinc inventories added 9,725 mt to 62,675 mt. Bearish prospects for demand recovery in top consumer China will keep near-term prices under pressure. Three-month LME zinc is expected to trade between $2,130-2,180/mt today, with the most-liquid SHFE contract at 17,000-17,500 yuan/mt. Spot premiums of 0# Shuangyan zinc are likely at 10-50 yuan/mt today. 

Lead: Three-month LME lead came off after climbed to a session high of $1,854,5/mt last Friday, ending down 1.68% on the day at $1,816/mt. Further downside potential is seen in LME lead, and support from $1,800/mt will be monitored. 

Tin: Three-month LME tin relinquished gains from the previous three sessions, closing down $405/mt at $16,290/mt, after fell to an intraday low of $16,180/mt. LME tin inventories shrank 20 mt to stand at 6,520 mt. Support is seen from $16,200/mt today.