SMM Evening Comments (Mar 24): Shanghai base metals rebounded on US Fed stimulus

SHANGHAI, Mar 24 (SMM) – SHFE nonferrous metals, except for nickel, rose on Tuesday and regained losses from the previous day, as some of the virus-related fears were relieved by the US Federal Reserve’s open-ended asset purchase program.

SHFE tin led the rebound with a rise of 5.98%. Copper advanced 4.29%, aluminium added 0.53%, lead gained 2.32%, zinc climbed 2.23%, while nickel shed 1.01%. 

The ferrous complex also traded mostly higher as iron ore expanded 0.16%, rebar increased 0.41%, hot-rolled coil grew 1.46%, coke rose 1.58%, while stainless steel slipped 0.13%.

The US Fed announced an open-ended asset purchase program on Monday. The central bank said the program will run in the “amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.”  

The SHFE has suspended night trading session until further notice.

Copper: The most-liquid SHFE May contract jumped to a session high 38,820 yuan/mt after opened at 38,260 yuan/mt, but pared some gains and closed the day 4.29% higher at 38,200 yuan/mt. Short positions departed and led to a decline of 743 lots in open interests. Limited upward momentum amid technical pressure and virus uncertainties may see the contract testing support from 37,000 yuan/mt. 

Aluminium: The most-traded SHFE contract trimmed increase from the early session as it came off from an intraday high of 11,510 yuan/mt on loaded-up shorts, ending 0.53% higher on the day at 11,435 yuan/mt. It remained below all moving averages and negative fundamentals may cap its upward momentum in the near term. 

Zinc: The most-active SHFE returned above the daily moving average and regained losses after it slipped to an intraday low of 14,610 yuan/mt, ending 2.23% higher on the day at 14,895 yuan/mt. Limited changes in fundamentals will see zinc prices fluctuating with macroeconomic development. 

Nickel: The most-liquid SHFE June contract retreated after improved market sentiment lifted it to a session high of 93,800 yuan/mt. Loaded-up shorts sent the contract 1.01% lower on the day at 91,690 yuan/mt, extending the decline from Monday. However, support remains from 90,000 yuan/mt and supportive measures from authorities will be closely monitored. 

Lead: The most-active SHFE May contract strengthened with support from 13,350 yuan/mt, closing up 2.32% at 13,460 yuan/mt. The five-day moving average also showed signs of recovering. Tight supply in the spot market lifted premiums and once widened the price gap between the April and May contracts to 235 yuan/mt. 

Tin: The most-liquid SHFE June contract recovered from Monday’s losses as it stemmed decline at 110,510 yuan/mt and finished the day 5.98% higher at 113,990 yuan/mt on the back of loaded-up longs. Pressure above is seen from 116,000-117,000 yuan/mt.