SMM Morning Comments (Mar 15): Shanghai base metals were mostly lower ahead of this week's Fed meeting

SHANGHAI, Mar 15 (SMM) — Nonferrous metals on both SHFE and LME mostly cruised lower on Monday morning ahead of this week's Federal Reserve meeting stateside.

Shanghai base metals ended mostly lower in overnight trading. Zinc weakened 0.41%, nickel shed 1.51% and tin fell 2.19%, while copper rose 0.55%, aluminium remained unchanged and lead added 0.37%.

The LME complex performed similarly on Friday. Tin plunged 1.93% to lead the losses, nickel fell 1.47%, zinc weakened 0.37% and aluminium slid 0.39%, while copper gained 0.8% and lead climbed 1.47%.

Copper: Three-month LME copper rose 0.08% to end at $9,132/mt on last Friday, and is likely to trade between $9,100-9,180/mt today.

The most-active SHFE 2105 copper contract went up 0.76% to close at 67,430 yuan/mt in overnight trading, and it is expected to move between 67,200-67,800 yuan/mt today, while spot prices will be seen at premiums 10 – discounts 120 yuan/mt.

The $1,400 subsidy under the Biden administration's $1.9 trillion bail-out bill began to be paid on Friday, and the macro sentiment remained optimistic. In terms of data, the US announced on Friday that the producer price accelerated in February, and the initial value of the confidence consumption index rose to 83 in March, a new high during the pandemic. Treasury Secretary Yellen still said that the inflation risk was small and controllable. Copper futures rose on Friday night. The guidance of the Fed's interest rate decision to the market will be monitored this week.

Aluminium: Three-month LME aluminium fell 0.64% to close at $2,171/mt on Friday, with open interest rising to 726,000 lots. It is expected to fluctuate between $2,100-2,160/mt today.

The most-liquid SHFE 2014 aluminium contract remained unchanged to settle at 17,370 yuan/mt on Friday night, and is likely to fluctuate between 17,200-17,600 yuan/mt today. The overall consumption of aluminium downstream improved. Recently, the impact of double control of energy consumption in Inner Mongolia on primary aluminium continued to ferment. The market was bullish with active downstream restocking and the spot discount narrowed. Spot prices will be seen at discounts 50 – premiums 20 yuan/mt.

Zinc: Three-month LME zinc fell 0.71% to close at $2,812/mt on last Friday. Zinc stocks at LME-listed warehouses fell 500 mt to 267,175 mt. In additionto the rising yield of US bonds and the strong US dollar, the market was worried that with the expansion of vaccination coverage, the pandemic blockade will end, and large-scale fiscal stimulus and depressed consumer demand may lead to rising inflation. The contract is likely to trade between $2,780-2,830/mt today.

The most-liquid SHFE 2104 zinc contract fell 0.41% to end at 21,645 yuan/mt in overnight trading. Zinc prices were running at a high level and the spot market was sluggish, lifting up social inventories. The recent environmental protection and limited production in northern China also limited the production of some galvanised enterprises. Environmental protection and limited production in the north will be monitored in the short term. The SHFE zinc contract is expected to move between 21,400-21,900 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 50-60 yuan/mt.

Nickel: The most-active SHFE 2106 nickel contract fell 1.51% to close at 119,950 yuan/mt on last Friday. Open interests rose 6,963 lots to 131,000 lots. The overall consumption of refined nickel market was relatively stable, and downstream restocked for rigid demand at low prices. The spot of battery-grade nickel sulphate was still tight, but due to the deep drop of nickel prices, the spot prices of battery-grade nickel sulphate may follow the downward trend recently. It is expected that nickel sulphate will still maintain a high premium to nickel briquettes according to the current performance of end-user consumption. SHFE nickel is expected to trade between 118,000-126,000 yuan/mt this week. LME nickel is expected to trade between $15,700-16,500/mt this week.

Lead: Three-month LME lead settled 0.46% higher at $1,971/mt on last Friday. Although LME lead stocks continued to accumulate, economic stimulus plans and the improved US economic data still made the market optimistic. Whether the contact could maintain its upward trend in the macro boost will be monitored today.

The most-active SHFE 2104 lead contract trended higher on Friday night, ending 0.37% higher at 14,825 yuan/mt. Recently, the downstream consumption of lead was stable, and it is difficult to give SHFE lead a strong rebound momentum. However, the limited production of secondary lead and the slight decline of battery scrap gave the contract support. Whether the contract could stand firm above 14,800 yuan/mt will be monitored today.

Tin: Three-month LME tin closed down 2.08% at $25,400/mt on last Friday. The data released on Friday showed that the producer price index (PPI) of the US rose strongly in February, and consumer confidence rose to a one-year high. After passing the large-scale COVID-19 rescue plan this week, the Biden administration will turn to large-scale infrastructure investment legislation in the next step. Market participants are increasingly worried that with the expansion of vaccination coverage leading to the end of the pandemic blockade, large-scale fiscal stimulus and suppressed consumer demand may lead to rising inflation. It is expected that the contract will keep fluctuating robustly in the near term. Pressure above will be seen from $27,000/mt today. Support below will be seen from $24,500/mt today.

The most-liquid SHFE 2105 tin contract fell 2.23% at 176,350 yuan/mt on Friday night. Although the supply of tin ore is still tight, after the CNY, tin ingot stocks accumulated and consumption slowed down, which led to the increase of inventory pressure and dragged down the trend of tin prices. Pressure above will be seen from 185,000 yuan/mt today. Support below will be seen from 170,000 yuan/mt today.