SMM Morning Comments (Feb 22) Shanghai base metals rose across the board amid improved risk appetite

SHANGHAI, Feb 22 (SMM) — Shanghai base metals all cruised higher on Monday morning as risk appetite was stoked by better-than-expected economic data and expectations that US President Joe Biden’s proposed $1.9 trillion coronavirus relief package will come to fruition, while their counterparts on the LME also increased across the board.  

Shanghai base metals rose across the board on last Friday night. Copper added 0.36%, zinc gained 0.14%, nickel jumped 2.28%, lead rose 1.58% and tin soared 3.99%. 

The LME complex were mostly higher on last Friday. Copper surged 3.89%, nickel jumped 2.32%, lead rose 1.08% and tin soared 3.75%, while aluminium shed 0.23% and zinc declined 0.35%. 

Copper: Three-month LME copper surged 3.89% to close at $8,941/mt last Friday. The most-traded SHFE 2104 copper contract added 0.36% to end at 65,840 yuan/mt last Friday night.

The US dollar index extended declines, at one point falling to a low of 90.172, which boosted copper prices. The preliminary US Markit composite PMI stood at 58.8 in February, the highest in the six years. LME copper stocks shrank to 75,700 mt. Concerns over tight copper supply also lent support to prices. LME copper is expected to trade between $8,950-9,030/mt today, and SHFE copper between 65,600-66,100 yuan/mt, while spot copper will be traded between discounts of 50 yuan/mt and premiums of 50 yuan/mt.

Zinc: Three-month LME zinc weakened 0.35% to settle at $2,867/mt last Friday, with open interest adding 1,338 lots to 239,000 lots. Zinc stocks across LME-listed warehouses fell by 3,325 mt, or 1.19%, to 276,525 mt. LME zinc is likely to move between $2,860-2,910/mt today.

The most-traded SHFE 2104 zinc contract firmed 0.14% to close at 21,630 yuan/mt last Friday night, with open interest rising 383 lots to 60,805 lots. The SHFE 2104 zinc contract is likely to move between 21,300-21,800 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen at 90 yuan/mt against the contract.

Nickel: The most-liquid SHFE 2104 nickel contract jumped 2.28% to end at 145,280 yuan/mt last Friday night, with open interest decreasing 1,835 lots to 208,000 lots.

Lead: Three-month LME lead advanced 1.08% to settle at $2,151/mt last Friday after hitting a nearly one-year high at $2,170/mt earlier in the session. LME lead stocks dipped 50 mt to 96,050 mt as of February 19. 

The most-liquid SHFE 2103 lead contract closed 1.58% higher at 15,730 yuan/mt last Friday night.  In the two trading days after the Chinese New Year holiday, Chinese non-ferrous stocks performed well, and market participants were optimistic about economic recovery and industrial production, which boosted SHFE lead. Lead prices are likely to remain at high levels this week as the spot market gradually recovers.

Tin: Three-month LME tin soared 3.75% to end at $26,075/mt last Friday amid concerns on tin supply and upbeat market sentiment. The dollar lost ground on Friday as market participants favored currencies associated with risk-on sentiment over the safe-haven greenback. Risk appetite was stoked by better-than-expected economic data and expectations that U.S. President Joe Biden’s proposed $1.9 trillion coronavirus relief package will come to fruition. 

The most-liquid SHFE 2104 tin contract surged 3.99% to settle at 188,900 yuan/mt last Friday night, with open interest losing 1,946 lots to 41,500 lots. It is likely to move between 174,000-190,000 yuan/mt today.