SMM Morning Comments (Apr 21): Shanghai base metals opened lower Tuesday after historic oil plunge

SHANGHAI, Apr 21 (SMM) – SHFE nonferrous metals traded lower on Tuesday morning, relinquishing gains from the prior session, following the US oil prices collapse Monday. 

US crude oil futures crashed below zero for the first time ever on Monday, as demand for the commodity decreased on the coronavirus impact and storage capacity in the US was at its limit.

West Texas Intermediate, the US benchmark, traded as low as -$40.32/barrel in a day of chaos in oil markets on Monday. The settlement price was -$37.63, compared to $18.27 on Friday.

LME base metals closed mixed with nickel as the best performer, advancing 2.64%. Tin added 0.36%, lead climbed 0.36%, while aluminium went flat, copper shed 0.96% and zinc fell 0.31%.

Copper: Prices of copper may face pressure from pessimistic market sentiment following the historic decline in oil prices Monday. Three-month LME copper is expected to trade between $5,120-5,180/mt with the most-liquid SHFE contract at 41,800-42,300 yuan/mt. Spot premiums are seen at 120-160 yuan/mt. 

Aluminium: Three-month LME aluminium closed flat on the day at $ 1,505/mt, after it dipping to a session low of $ 1,487/mt. Weak fundamentals and chaos in oil markets will likely depress LME aluminium to $1,480-1,515/mt today. The most-traded SHFE contract could also pull back and trade between 12,050-12,350 yuan/mt today. 

Zinc: Three-month LME zinc slipped to a session low of $1,940/mt and ended Monday 0.31% lower at $1,945/mt, as investors confidence plummeted on oil price collapse. LME zinc inventories continued to shrink by 0.25%, or 250 mt on Monday to 98,050 mt. Automakers overseas began to restart operations, but they are likely to keep operating rates at low levels as the demand outlook remains grim. Today, LME zinc is expected to hover between $1,910-1,960/mt, with the most-traded SHFE contract at 15,700-16,200 yuan/mt. 

Nickel: Nickel remained the best performer among LME base metals, with the three-month LME nickel broke up the 60-day moving average and hit a session high of $12,535/mt, ending at $12,495/mt. With some upward momentum, LME nickel is expected to test pressure from $12,700/mt today. 

Lead: Three-month LME lead regained losses from the previous day as it bounced back during the European trading hours, rising to a session high of $1,696.5/mt and ended up 0.39% on the day at $1,683.5/mt. Nonetheless, the overall trend remained weak and any upsides could be limited today.  

Tin: Three-month LME tin consolidated at high levels, trimming some gains after rising to an intraday high of $ 15,400/mt, finishing 0.36% higher on the day at $ 15,230/mt. Pressure above is seen from $15,700/mt, with support below from $15,000/mt.