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SMM Morning Comments (May 14): Shanghai base metals fell across the board as investors digested inflation data

iconMay 14, 2021 10:00
Source:SMM
Nonferrous metals on both SHFE and LME declined across the board on Friday morning after the latest US inflation data for April showed higher-than-expected price pressures.

SHANGHAI, May 14 (SMM) — Nonferrous metals on both SHFE and LME declined across the board on Friday morning after the latest US inflation data for April showed higher-than-expected price pressures.

Shanghai base metals fell across the board in overnight trading. Copper fell 1.12%, aluminium declined 0.81%, zinc shed 0.65%, tin weakened 0.47%, lead slid 1.66% and nickel dropped 1.39%.

The LME complex fell across the board on Thursday. Lead plunged 1.58% to lead the losses, zinc fell 1.23%, aluminium weakened 1.44%, copper decreased 1.38%, nickel went down 1.28% and tin dropped 0.92%.

Copper: Three-month LME copper fell 1.18% to end at $10,287/mt on Thursday, and is likely to trade between $10,290-10,370/mt today.

The most-active SHFE 2106 copper contract went down 1.05% to close at 75,170 yuan/mt in overnight trading, and it is expected to move between 75,000-75,600 yuan/mt today, while spot will be seen at premiums 50 - discounts 100 yuan/mt.

It was announced last night that the number of initial jobless claims in the US fell to a new low since the outbreak of the pandemic last week, indicating that the labor market continued to improve, and the three major US stock indexes rose across the board at night. The macro positive sentiment supported copper prices to remain high, while the April PPI data released last night in the US rose more than expected, which aggravated the pressure of inflation. The market still worried about tightening monetary policy under inflation, which put pressure on copper prices to a certain extent. The active market conditions of inquiry made cargo holders reluctant to trade at a discount, and the market trading activity obviously improved.

Aluminium: Three-month LME aluminium fell 1.68% to close at $2,554/mt on Thursday. It is expected to trade between $2,400-2,480/mt today.

The most-liquid SHFE 2106 aluminium contract fell 0.81% to settle at 19,555 yuan/mt on Thursday night, and is likely to reach 19,650 yuan/mt, and fall below 19,400 yuan/mt.

Zinc: Three-month LME zinc fell 1.87% to close at $2,918.5/mt on Thursday. Zinc stocks at LME-listed warehouses fell 575 mt to 287,550 mt. The PPI and CPI data of the US in April were stronger than expected, which caused market inflation concerns. LME zinc fell under pressure. However, the number of initial jobless claims in the US recorded a new low since the pandemic, limiting the downside space of LME zinc. The contract is likely to trade between $2,880-2,930/mt today.

The most-liquid SHFE 2106 zinc contract fell 0.65% to end at 22,005 yuan/mt in overnight trading. The pattern of weak supply and demand of zinc fundamentals remained unchanged in the near term, and the support for zinc prices was weak. Considering the country's concerns about the rise of commodity prices, it is expected that the contract will still run weakly at high. The contract will test support from 22,000 yuan/mt in the near term. 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 0 - -10 yuan/mt.

Nickel: The most-active SHFE 2106 nickel contract fell 1.39% to close at 128,640 yuan/mt on Thursday. Open interests rose 2,972 lots to 93,000 lots. The contract will test support from 128,000 yuan/mt today.

Lead: Three-month LME lead settled 1.58% lower at $2,150.5/mt on Thursday. Whether the contract could stop falling and stand firm above $2,150/mt will be monitored today.

The most-active SHFE 2106 lead contract went down 1.66% to close at 15,145 yuan/mt on Thursday night. Trading in the spot market improved slightly yesterday, while downstream orders did not improved significantly. The expectation of the increase in social stocks still should be monitored today. The contract will test support from 15,150 yuan/mt today.

Tin: Three-month LME tin closed down 2.12% at $29,115/mt on Thursday. The African tin mine announced the feasibility study of its Eus project, and the research report confirmed that it is feasible to expand the capacity of the first-stage concentrator from 720 mt of tin concentrate to 1,200 mt per year. The US dollar held steady near this week's high on Thursday, after the US Department of Labor announced that the producer price index (PPI) in April was stronger than expected, further proving that inflation in the US was heating up. With the high tin prices, the supply of tin increased recently, which alleviated the tight supply situation. After the continuous increase in the previous period, LME tin has adjustment demand, which is expected to mainly trade under pressure in the near term. Pressure above will be seen from $30,000 /mt today. Support below will be seen from $28,200/mt today.

The most-liquid SHFE 2107 tin contract fell 1.67% to end at 192,280 yuan/mt on Thursday night. It is expected that the contract will keep fluctuating weakly 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

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