SMM Morning Comments (Apr 2): Shanghai base metals were mostly higher on softer US dollar

SHANGHAI, Apr 2 (SMM) — Nonferrous metals on the SHFE rose for the most part on Friday morning.

Shanghai base metals rose broadly in overnight trading. Copper advanced 0.89%, aluminium added 0.49%, nickel rose 1.28% and tin jumped 2.18%, while zinc shed 0.97% and lead weakened 0.56%. 

The LME complex, except for aluminium and nickel, closed lower on Thursday. Copper edged down 0.05%, zinc dropped 1.41%, lead shed 0.96% and tin weakened 0.42%, while aluminium gained 0.79% and nickel rose 0.65%. 

Copper: Three-month LME copper edged down 0.05% to close at $8,805/mt on Thursday, While the most-traded SHFE 2015 copper contract  added 0.89% to end at 65,670 yuan/mt in overnight trading. US Markit manufacturing PMI stood at 59.1 in March, and the ISM manufacturing PMI came in at 64.7, much better than expected. These strengthened positive outlook for global economic recovery. The three major US stock indexes all closed higher on Thursday in the wake of improving economic prospects backed by the Biden government’s more than $2 trillion stimulus plan. The US dollar index fell to 92.89, the lowest in a week. Oil prices recorded the largest increase in nearly one week amid optimism over future demand recovery. LME copper is expected to trade between $8,770-8,850/mt today, and SHFE copper between 65,400-66,000 yuan/mt, while spot copper will be traded between discounts of 80-20 yuan/mt.

Aluminium: Three-month LME aluminium settled 0.79% higher at $2,230/mt on Thursday, with open interest decreasing 7,546 lots to 712,000 lots. It is expected to move between $2,220-2,250 yuan/mt today.

The most-active SHFE 2105 aluminium contract gained 0.49% to close at 17,485 yuan/mt in overnight trading, with open interest losing 713 lots to 204,000 lots. It is likely to trade between 17,300-17,600 yuan/mt today.

Zinc: Three-month LME zinc dropped 1.41% to end at $2,769/mt on Thursday, with open interest decreasing 2,680 lots to 232,000 lots. Zinc stocks across LME-listed warehouses shrank by 350 mt or 0.13% to 270,500 mt. LME zinc is likely to move between $2,760-2810/mt today.

The most-traded SHFE 2105 zinc contract fell 0.97% to settle at 21,375 yuan/mt in overnight trading, posting a three-day losing streak, with open interest adding 1,547 lots to 77,612 lots. The May contract is likely to move between 21,300-21,800 yuan/mt today, while spot discounts for domestic 0# Shuangyan will be seen at 20-30 yuan/mt against the contract.

Nickel: Three-month LME nickel firmed 0.65% to settle at $16,225/mt on Thursday.

The most-active SHFE 2106 nickel contract rose 1.28% to close at 122,730 yuan/mt in overnight trading, with open interest adding 699 lots to 142,000 lots.

Lead: Three-month LME lead closed 0.96% lower at $1,958/mt on Thursday, while the most-liquid SHFE 2105 lead contract slid 0.56% to end at 15,215 yuan/mt in overnight trading. 

Tin: Three-month LME tin slipped 0.42% to settle at $25,120 yuan/mt on Thursday, with open interest losing 231 lots to 12,291 lots. Investors are now looking to Friday’s non-farm payrolls report to confirm their positive view on the dollar and the economy. LME tin is expected to trade between $25,000-26,000/mt today.

The most-active SHFE 2106 tin contract jumped 2.18% to settle at 180,400 yuan/mt in overnight trading, with open interest adding 2,799 lots to 32,407 lots. It is expected to trade between 170,000-183,000 yuan/mt today.