SMM Morning Comments (Aug 27): Shanghai base metals were mostly higher as investors await speech from Fed’s Powell

SHANGHAI, Aug 27 (SMM) — Shanghai base metals increased for the most part as of 10:19 Beijing time on Thursday morning ahead of a highly anticipated speech by Federal Reserve Chairman Jerome Powell, while their counterparts on the LME also broadly rose and changes were less than 1%.

Shanghai base metals closed mixed in overnight trading. Copper added 0.43%, nickel rose 1.03% and tin advanced 0.53%, while zinc fell 0.13%, lead weakened 0.54% and aluminium traded flat.

Nonferrous metals on the LME also traded mixed on Wednesday. Copper rose 0.98%, nickel climbed 1.33% and tin increased 1.12%, while aluminium shed 0.17%, zinc weakened 0.22% and lead slipped 0.4%.

Copper: Three-month LME copper tended higher on Wednesday, closing 0.98% higher at $6,600/mt. It is likely to move between $6,600-6,660/mt today.  

The most-active SHFE 2010 copper contract settled 0.43% firmer at 51,520 yuan/mt in overnight trading. It is expected to trade between 51,500-52,000 yuan/mt today, while spot premiums are seen lower at 10-50 yuan/mt.  

Federal Reserve Chairman Jerome Powell will give a speech on the US central bank’s policy framework review today, and is expected to introduce a new pandemic-era tool to combat the economic impact of Covid-19 and foster inflation in the US. As risk appetite improved amid signs of economic recovery, US three major stock indexes all closed higher on Wednesday, with the S&P 500 and Nasdaq Composite rising to fresh record highs. In addition, declined US dollar index also boosted copper prices. However, US-China conflicts on the South China Sea issue and weakened demand pressured copper prices.

Aluminium: Three-month LME aluminium weakened 0.17% to end at $1,776/mt on Wednesday.  

The most-liquid SHFE 2009 aluminium contract closed flat at 14,690 yuan/mt in overnight trading.  

Zinc: Three-month LME zinc settled 0.22% weaker at $2,472/mt on Wednesday. Zinc stocks across LME warehouses dipped 200 mt or 0.09% to 224,100 mt. Weak US dollar and US durable goods orders that increased more than expected boosted LME zinc, but mounting geopolitical tensions cooled market sentiment. LME zinc is expected to move between $2,450-2,500/mt today.   

The most-traded SHFE 2010 zinc contract weakened 0.13% to close at 19,850 yuan/mt in overnight trading. US-China disputes over the South China Sea issue dampened market sentiment, but optimism on future consumption and mines in Bolivia suspending operations due to the coronavirus pandemic underpinned zinc prices. The October contract is likely to trade between 19,600-20,100 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen lower at 100-110 yuan/mt.  

Nickel: The most-active SHFE 2011 nickel contract broke above the 120,000 yuan/mt mark as market talks came that an NPI industrial park in Indonesia suspended production due to heavy rainfalls, before erasing some gains to close 1.03% higher at 119,830 yuan/mt in overnight trading. Whether the November contract could climb above 120,000 yuan/mt again will come under scrutiny today.  

Lead: Three-month LME lead came off an intraday high of $2,005/mt to an intraday low of $1,968.5/mt, before reversing some losses to close 0.4% lower at $1,980/mt on Wednesday.  

The most-liquid SHFE 2010 lead contract fell to a session low of 15,675 yuan/mt after opening of the overnight trading, before wiping out some losses to end 0.54% weaker at 15,750 yuan/mt.  

Tin: Three-month LME tin jumped 1.12% to end at $17,565/mt on Wednesday. LME tin stocks inched up 10 mt to 5,215 mt. Pressure above will be seen at $17,650/mt today.

The most-liquid SHFE 2011 tin contract opened at a high of 142,580 yuan/mt, but later fell rapidly to a session low of 141,800 yuan/mt, before regaining some ground to close 0.53% higher at 142,330 yuan/mt in overnight trading. Support below will be seen at around 141,500 yuan/mt today.