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SMM Morning Comments (May 7): Shanghai base metals were mostly higher as investors looked ahead to key US jobs report

iconMay 7, 2021 10:00
Source:SMM
Shanghai base metals were mostly higher on Friday morning ahead of the US jobs report due later in the day that might provide some indication on what the Fed could do next. Meanwhile, their counterparts on the LME rose across the board.

SHANGHAI, May 7 (SMM) — Shanghai base metals were mostly higher on Friday morning ahead of the US jobs report due later in the day that might provide some indication on what the Fed could do next. Meanwhile, their counterparts on the LME rose across the board.

Shanghai base metals mostly advanced in overnight trading. Copper added 1.15%, lead rose 1.69%, aluminium went up 1.4%, zinc increased 0.84% and nickel strengthened 0.67%, while tin slid 0.25%.

The LME complex all closed higher on Thursday. Copper rose 1.85%, aluminium increased 2.55%, zinc went up 0.53%, lead added 2.37%, nickel jumped 0.08% and tin gained 1.34%.

Copper: Three-month LME copper rose 1.85% to end at $10,115.5/mt on Thursday, and is likely to trade between $10,080-10,160/mt today.

The most-active SHFE 2106 copper contract went up 0.79% to close at 73,820 yuan/mt in overnight trading, and it is expected to move between 73,800-74,300 yuan/mt today, while spot discounts will be seen at 100-30 yuan/mt.

The number of initial jobless claims in the United States last week stood at 498,000, which dropped to a new low during the pandemic period, indicating that the labor market was recovering steadily. Strong economic data and Federal Reserve reports continued to dilute inflation concerns, Dow Jones index rose to a record high, US dollar index continued to fall, and copper prices approached a record high. US nonfarm payrolls data to be released on Friday should be monitored. It is expected that the spot discount in the market outlook will only tend to narrow, and the downstream will have no choice but to accept the gradual restocking.

Aluminium: Three-month LME aluminium rose 2.55% to close at $2,510/mt on Thursday. It is expected to trade between $2,450-2,520/mt today.

The most-liquid SHFE 2106 aluminium contract rose 0.9% to settle at 19,560 yuan/mt on Thursday night, and is likely to trade between 19,200-19,600 yuan/mt today.

Zinc: Three-month LME zinc rose 0.53% to close at $2,946.5/mt on Thursday. Zinc stocks at LME-listed warehouses fell 400 mt to 291,025 mt. Overnight, the US dollar was weak, and the LME metals generally rose, which led to the upward movement of LME zinc. The number of initial jobless claims in the US last week dropped to the lowest since the pandemic, boosting market sentiment. The contract is likely to trade between $2,900-2,950/mt today.

The most-liquid SHFE 2106 zinc contract rose 0.84% to end at 22,090 yuan/mt in overnight trading. Fundamental support is limited, and spot market transactions are tepid after the holiday. It is expected that the contract will keep fluctuating strongly with limited upward space. The SHFE zinc contract is expected to move between 21,800-22,300 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 50-70 yuan/mt.

Nickel: The most-active SHFE 2106 nickel contract rose 0.08% to close at 132,970 yuan/mt on Thursday. Open interests fell 7,952 lots to 144,000 lots. The impact of stainless steel on nickel trade also should be monitored.

Lead: Three-month LME lead settled 2.37% higher at $2,220.5/mt on Thursday. LME lead stocks continued to decline slightly. Whether the contract could stand firm above $2,200/mt and continue to challenge the high target of $2,265/mt in 2019 will be monitored today.

The most-active SHFE 2106 lead contract went up 1.69% to close at 15,640 yuan/mt on Thursday night. Lead prices increased greatly on week due to the warmer macro sentiment and the stronger LME lead. However, spot trading tends to be cautious, and the downstream orders have not improved significantly, which is difficult to support SHFE lead to continue to rise. The contract is likely to keep fluctuating at high in the near term. Whether the contract could continue the long position market and stand firm at 15,600 yuan/mt will be monitored today.

Tin: Three-month LME tin closed up 1.34% at $30,170/mt on Thursday. The US dollar closed down yesterday as the global market risk appetite improved and traders waited for the April US employment report to be released today. The tight supply in the overseas tin market and the weak US dollar supported the rising trend of LME tin. The contract is expected to trade strongly. Pressure above will be seen from $31,000 /mt today. Support below will be seen from $28,500/mt today.

The most-liquid SHFE 2107 tin contract rose 0.2% to end at 197,980 yuan/mt on Thursday night. The continuous rise of LME tin supported SHFE tin to a certain extent. However, domestic fundamentals lack strong bullish factors, and the rise of SHFE tin is not as good as that of the LME tin. It is expected that the contract will keep fluctuating at high in the near term. Pressure above will be seen from 200,000 yuan/mt today. Support below will be seen from 193,000 yuan/mt today.

Market commentary
Copper
Aluminium
Zinc
Nickel
Lead
Tin

For queries, please contact Michael Jiang at michaeljiang@smm.cn

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