SMM Morning Comments (May 19): Shanghai base metals were mostly higher as global sentiment improved

Publicado: May 19, 2021 10:00 (GMT+8)
Shanghai base metals were mostly higher on Wednesday morning as global markets attempted to break out from the gloomy sentiment seen at the start of the trading week. Meanwhile, their counterparts on the LME also rose for the most part.

SHANGHAI, May 19 (SMM) — Shanghai base metals were mostly higher on Wednesday morning as global markets attempted to break out from the gloomy sentiment seen at the start of the trading week. Meanwhile, their counterparts on the LME also rose for the most part.

Shanghai base metals mostly advanced in overnight trading. Lead increased 1.34%, tin rose 0.76%, nickel went up 0.2% and zinc strengthened 0.43%, while copper slid 0.42% and aluminium weakened 0.73%.

The LME complex ended mostly higher on Tuesday. Copper added 0.47%, lead rose 0.91%, tin increased 1.25%, zinc went up 0.81% and nickel strengthened 0.39%, while aluminium fell 1.22%.

Copper: Three-month LME copper fell 0.47% to end at $10,416/mt on Tuesday, and is likely to trade between $10,290-10,370/mt today.

The most-active SHFE 2106 copper contract went down 1.06% to close at 75,290 yuan/mt in overnight trading, and it is expected to move between 75,000-75,500 yuan/mt today, while spot premiums will be seen at 160-60 yuan/mt.

The data of housing starts in April in the US was far below the previous value and expectation, which reflected that the market economy was still showing a slow recovery trend and the market sentiment continued to cool down. In addition, oil prices dropped at night, which also dragged down copper futures. The guidance of the Fed meeting dynamics to the market will be monitored today. In terms of spot prices, the contract stabilised and rebounded, while the downstream kept purchasing for rigid demand, which limited the downward adjustment and reunited the rebound momentum. On the contrary, traders are hindered by the obvious narrowing of discount, and the transaction is not as proactive as before. Spot discount space also depends on the rebound strength of the market, and mutual achievements and mutual constraints exist between the contract and spots.

Aluminium: Three-month LME aluminium fell 1.22% to close at $2,466/mt on Tuesday. As the US dollar index continueds to weaken in the near term, it is expected that LME aluminium will try to continue to repair the recent decline today. It is expected to trade between $2,450-2,550/mt today.

The most-liquid SHFE 2107 aluminium contract fell 0.61% to settle at 19,545 yuan/mt on Tuesday night, and is likely to trade between 19,500-19,800 yuan/mt today. It is expected that the contract will keep fluctuating at high today. Although the fundamentals are still dominated by bullish factors such as peak consumption season and peak power curtailment, the enthusiasm of bulls to continue to push up is reduced under the absolute high aluminum prices.

Zinc: Three-month LME zinc rose 0.81% to close at $3,055/mt on Tuesday. Zinc stocks at LME-listed warehouses fell 575 mt to 286,375 mt. The market was worried that Peru and Chile will raise the tax rate of mining enterprises, which may squeeze the supply of zinc. However, the total number of housing starts in the US in April was less than expected, the market sentiment cooled down, and LME zinc slightly adjusted back. The contract is likely to trade between $3,040-3,090/mt today.

The most-liquid SHFE 2107 zinc contract rose 0.41% to end at 23,090 yuan/mt in overnight trading. Yunnan's power curtailment policy affected smelter production. As a result, SMM expects that China's refined zinc output will decrease 6,848 mt in May, and the supply side will support the zinc prices. However, under the high zinc prices, the tepid turnover in the spot market will limit its increase, and it is expected that zinc prices will still fluctuate strongly in the near term. The SHFE zinc contract is expected to move between 22,800-23,300 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be 20-30 yuan/mt.

Lead: Three-month LME lead settled 0.91% higher at $2,226/mt on Tuesday. The development of China-EU investment agreements, the impact of the development of China-EU relations on the market, and whether the contract could continue its long position market and continue to fluctuate strongly will be monitored today.

The most-active SHFE 2106 lead contract went up 1.34% to close at 15,530 yuan/mt on Tuesday night. Whether the trading activity in the spot market changes due to the strengthening of lead futures, and whether the contract could continue to be bullish and stand firm over 15,500 yuan/mt will be monitored today.

Tin: Three-month LME tin closed up 1.25% at $30,000/mt on Tuesday. Supported by the weak trend of the US dollar and the shortage of supply in China's spot market, LME tin reached a new high. The contract is expected to keep fluctuating strongly in the near term. Pressure above will be seen from $31,000/mt today. Support below will be seen from $29,500/mt today.

The most-liquid SHFE 2107 tin contract rose 0.89% to close at 200,450 yuan/mt on Tuesday night. Recently, the tight spot circulation in China supported the trend of tin prices, and it is expected to test whether the contract could stand firm over 200,000 yuan/mt in the near term.

Declaración de Fuente de Datos: Excepto la información disponible públicamente, todos los demás datos son procesados por SMM basándose en información pública, comunicación de mercado y confiando en el modelo de base de datos interna de SMM. Son solo para referencia y no constituyen recomendaciones para la toma de decisiones.

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