SMM Morning Comments (Jun 22): Shanghai base metals rose across the board following overnight Dow bounce

SHANGHAI, Jun 22 (SMM) — Shanghai base metals all cruised higher on Tuesday morning following big gains overnight for the Dow Jones Industrial Average on Wall Street. Meanwhile, their counterparts on the LME traded mixed.

Shanghai base metals all closed higher in overnight trading. Copper rose 0.64%, zinc increased 0.33%, aluminium added 1.04%, nickel jumped 1.77%, lead advanced 1.04% and tin went up 1.1%.

The LME complex ended mostly higher on Monday. Copper added 0.34%, aluminium rose 0.69%, tin increased 0.95%, lead went up 0.59% and nickel strengthened 1.77%, while zinc remained unchanged.

Copper: Three-month LME copper rose 0.34% to end at $9,180/mt on Monday, and is likely to trade between $9,130-9,210/mt today.

The most-active SHFE 2108 copper contract went up 0.64% to close at 67,340 yuan/mt in overnight trading, and it is expected to move between 67,000-67,600 yuan/mt today, while spot premiums will be seen at 90–160 yuan/mt.

Federal Reserve Chairman Powell reiterated that inflation will fall back to the Fed's long-term goal, and continuously downplayed the risk of reducing quantitative easing in the near future. The news eased the expectation of an urgent shift in monetary policy. Overnight, the US dollar plunged sharply, the three major indexes of US stocks collectively closed up, and copper futures stopped falling and recovered.

Aluminium: Three-month LME aluminium rose 0.69% to close at $2,402/mt on Monday. It is expected to trade between $2,380-2,450/mt today.

The most-liquid SHFE 2107 aluminium contract rose 1.04% to settle at 18,525 yuan/mt on Monday night, and is likely to trade between 18,200-18,600 yuan/mt today.

Zinc: Three-month LME zinc remained unchanged and closed at $2,840/mt on Monday. Zinc stocks at LME-listed warehouses fell 775 mt to 260,550 mt. The market speculated that Fed officials would ease their interest rate hikes and commodity prices stabilised. Powell continued to downplay the risk of reducing quantitative easing in the near future, and the market monetary policy concerns eased. The contract is likely to trade between $2,810-2,860/mt today.

The most-liquid SHFE 2107 zinc contract rose 0.33% to end at 21,600 yuan/mt in overnight trading. On fundamentals, the disturbance of Yunnan smelter on the supply side has basically ended. Domestic zinc ore and refined zinc increased steadily in May month on month, and the supply pressure gradually increased. However, zinc social inventories decreased again, which provided basic support for zinc prices. 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 180-200 yuan/mt.

Nickel: The most-active SHFE 2107 nickel contract rose 1.77% to close at 130,430 yuan/mt on Monday. Open interests fell 561 lots to 88,000 lots. The Fed's expectation of raising interest rates is still being digested. With the influence of the policy, there is still some pressure on the rise of metals, and the fundamental support of nickel is strong. Therefore, it led the rise of various metals last night. The contract will test pressure from $17,700/mt today.

Lead: Three-month LME lead settled 0.46% higher at $2,163/mt on Monday. The contract will test pressure from five-day moving average today.

The most-active SHFE 2107 lead contract went up 0.45% to close at 15,490 yuan/mt on Monday night. Domestic lead ingot inventories ended its continuous increase, and decline for the first time. The contract stabilized at high, and whether the contract could stand firm above 15,400 yuan/mt will be monitored today.

Tin: Three-month LME tin closed down 0.95% at $30,200/mt on Monday. The impact of recent macro news on tin price trend will be monitored. Pressure above will be seen from $30,600 /mt today. Support below will be seen from $29,000/mt today.

The most-liquid SHFE 2108 tin contract rose 0.63% to close at 200,770 yuan/mt on Monday night. Spot shortage supports tin prices, and it is expected that the contract will keep fluctuating and consolidating in the near term. Pressure above will be seen from 203,000 yuan/mt today. Support below will be seen from 198,500 yuan/mt today.