SMM Morning Comments (Apr 29): Shanghai base metals rose broadly as the Fed kept easy monetary policy

SHANGHAI, Apr 29 (SMM) — Shanghai base metals were mostly higher on Thursday morning, while their LME counterparts performed similarly, as the US Federal Reserve on Wednesday kept its easy money policy in place despite an economy that it acknowledged is accelerating.

Shanghai base metals, except for lead, closed higher in overnight trading. Copper rose 1.29%, aluminium added 0.76%, zinc advanced 0.56%, nickel jumped 2.82% and tin surged 3.27%, while lead slid 0.62%.

The LME complex also rose for the most part on Wednesday. Aluminium inched up 0.04%, nickel increased 2.36%, lead edged up 0.07% and tin soared 4.06%, while copper shed 0.22% and zinc dipped 0.09%. 

Copper: Three-month LME copper weakened 0.22% to close at $9,856.5/mt on Wednesday, while the most-traded SHFE 2106 copper contract rose 1.29% to end at 72,260 yuan/mt in overnight trading. The US Federal Reserve decided to keep short-term interest rates anchored near zero as it buys at least $120 billion of bonds each month. And this, combined with sliding US dollar index, boosted copper futures. LME copper is expected to trade between $9,840-9,920/mt today, and SHFE copper between 72,100-72,700 yuan/mt, while spot copper will be traded between discounts of 240-150 yuan/mt.

Aluminium: Three-month LME aluminium inched up 0.04% to settle at $2,400/mt on Wednesday. Shrinking LME aluminium stocks and recovering overseas economy lent support to LME aluminium. It is expected to fluctuate between $2,390-2,410/mt today.

The most-active SHFE 2106 aluminium contract advanced 0.76% to close at 18,575 yuan/mt in overnight trading. Pre-holiday restocking demand and weaker US dollar index supported aluminium prices. The June contract is likely to trade between 18,400-18,700 yuan/mt today.

Zinc: Three-month LME zinc edged down 0.09% to end at $2,926/mt on Wednesday, with open interest rising 4,327 lots to 252,000 lots. LME zinc stocks were unchanged at 291,950 mt. The US dollar index and Treasury yields both declined as the US central bank decided to keep easy monetary policy despite noting the economic strength as well as inflation that is on the rise. LME zinc is likely to move between $2,900-2,950/mt today.

The most-liquid SHFE 2106 zinc contract settled 0.56% higher at 22,250 yuan/mt in overnight trading, with open interest losing 439 lots to 100,341 lots. Import tariffs on some steel products will be removed from May, which will curb consumption in the medium and long term. The June contract is likely to move between 21,900-22,400 yuan/mt today, while spot discounts for domestic 0# Shuangyan will be seen at 40-60 yuan/mt against the May contract.

Nickel: The most-traded SHFE 2106 nickel contract jumped 2.82% to close at 129,950 yuan/mt in overnight trading, with open interest adding 1,453 lots to 156,000 lots. Three-month LME nickel surged 2.36% to end at $17,370/mt on Wednesday. 

Lead: Three-month LME lead inched up 0.07% to settle at $2,095/mt on Wednesday.   

The most-active SHFE 2106 lead contract shed 0.62% to close at 15,305 yuan/mt in overnight trading.

Tin: Three-month LME tin soared 4.06% to end at $28,290/mt on Wednesday, with open interest adding 127 lots to 11,864 lots. Tight overseas tin supply and falling US dollar index boosted tin prices. LME tin is expected to move between $27,000-29,000/mt today.

The most-liquid SHFE 2106 tin contract surged 3.27% to settle at 191,120 yuan/mt in overnight trading, with open interest losing 169 lots to 18,452 lots.   It is expected to fluctuate between 185,000-193,000 yuan/mt today.