SMM Morning Comments (Feb 13): Shanghai base metals rose as coronavirus fears receded

SHANGHAI, Feb 13 (SMM) – SHFE nonferrous metals traded mostly higher on the morning of Thursday as market sentiment was lifted amid optimism that the economic impact of the coronavirus will be contained. 

LME base metals, except for aluminium, ended higher last night. LME copper advanced 0.66%, zinc added 0.02%, nickel grew 0.27%, tin rose 0.33%, lead increased 0.19%, while aluminium eased 0.32%. The SHFE night trading session has been suspended since last week until further notice.

Copper: Three-month LME copper extended its increase, ending up 0.66% on the day at $5,763/mt, on the back of growing hopes that the spread of the coronavirus had slowed. Improved risk appetite and elevated oil prices on output cut prospects also supported copper prices. Bullish signals from technical indicators are likely to keep LME copper at $5,750-5,800/mt today, with the most-traded SHFE contract at 45,700-46,100 yuan/mt. Spot discounts may stop deepening and stood at 80-40 yuan/mt. 

Zinc: Three-month LME zinc traded rangebound at low levels and finished the trading day 0.02% higher at $2,154.5/mt. LME zinc inventories continued to increase by 575 mt to 72,600 mt, at a slower growth rate. While the epidemic impact may delay the resumption of some downstream producers till the second half of February, potential output cut on rising stocks of sulphuric acid and feedstock shortage may cap any downside room in zinc prices. Three-month LME zinc is expected to trade between $2,130-2,180/mt today, with the most-traded SHFE contract at 16,950-17,400 yuan/mt. 

Nickel: Three-month LME nickel hovered in a broad range with pressure from the 40-day moving average, before it closed up 0.27% on the day at $13,155/mt. Whether the K-indicator will hold firm above the 20-day moving average will be watched today. 

Lead: Three-month LME lead hit an intraday high of $1,858.5/mt before it trimmed some gains and closed 0.19% higher on the day at $1,851.5/mt. Prices have shown signs of stabilising after the previous decline. 

Tin: Three-month LME tin received support from the 10-day moving average as it rebounded from an intraday low of $16,380/mt and gained $55/mt on the day to finish at $16,570/mt. Support is expected from $16,300/mt today.