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SMM Morning Comments (Sep 21): Shanghai base metals rose broadly as China kept loan prime rates unchanged
Sep 21,2020 10:02CST
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Source:SMM
Shanghai base metals were mostly higher on Monday morning, while their counterparts on the LME set for a mixed start, as China kept its loan prime rates unchanged.

SHANGHAI, Sep 21 (SMM) — Shanghai base metals were mostly higher on Monday morning, while their counterparts on the LME set for a mixed start, as China kept its loan prime rates unchanged.

 

China’s one-year and five-year Loan Prime Rate (LPR) on Monday were kept unchanged at 3.85% and 4.65%, respectively.

 

Shanghai base metals closed higher for the most part on Friday night. Copper rose 1.25% to lead the gains, aluminium added 0.58%, zinc increased 1.04%, lead advanced 1.19% and tin climbed 0.7%, while nickel underperformed with a 0.63% loss.

Their counterparts on the LME performed similarly. Copper and aluminium strengthened 0.81%, zinc firmed 1.41%, lead added 0.68% and tin edged up 0.28%, while nickel slid 1.62%.

 

Copper: Three-month LME copper bounced off an intraday low of $6,774/mt to surge to its highest in more than two years at $6,875/mt on Friday, before giving some gains to close 0.81% higher at $6,850/mt. It is likely to move between $6,800-6,860/mt today.

The most-active SHFE 2010 copper contract climbed 1.25% to settle at 52,640 yuan/mt on Friday night, after hitting its highest in nearly two weeks at 52,780 yuan/mt earlier in the session. It is expected to fluctuate between 52,300-52,700 yuan/mt today.  

The US Federal Reserve vowed last week to keep interest rates near zero to support the coronavirus-hit economy, and the Japanese and British central banks also decides to keep ample liquidity. Oil prices generated the largest increase in a single week since June as Organisation of Petroleum Exporting Countries (OPEC) and its allies urged oil-producing countries to strictly comply with output cuts. These supported copper prices.  

 

Aluminium: Three-month LME aluminium increased 0.81% to close at $1,795.5/mt in choppy trading on Friday, and is likely to fluctuate range-bound in the short term.

The most-liquid SHFE 2010 aluminium contract settled 0.58% firmer at 14,665 yuan/mt on Friday night, and is expected to move between 14,500-14,850 yuan/mt today, while spot premiums are seen at 80-140 yuan/mt.

 

Zinc: Three-month LME zinc settled 1.41% higher at $2,547.5/mt on Friday, after hitting a more than two-week high of $2,550/mt earlier in the session. LME zinc stocks remained unchanged at 219,525 mt. Weak US dollar, positive news of coronavirus vaccines and expectations of more fiscal stimulus by governments around the world boosted market sentiment, but geopolitical risks still exist. LME zinc is expected to move between $2,510-2,560/mt today.   

The most-traded SHFE 2011 zinc contract strengthened 1.04% to close at 20,000 yuan/mt on Friday night. In terms of fundamentals, treatment charges (TCs) for both domestic and imported zinc concentrate declined, suggesting a tight supply of raw materials, while an SMM survey showed that orders for galvanising steadied and those for die-cast zinc alloy increased. The November contract is likely to trade between 19,600-20,100 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen at 140-190 yuan/mt against the October contract.

 

Lead: Three-month LME lead bounced back from an intraday low of $1,901/mt to an intraday high of $1,922/mt before paring some gains to end 0.68% higher at $1,914.5/mt on last Friday.  

The most-active SHFE 2010 lead contract rose 1.19% to close at 15,250 yuan/mt on Friday night. The effect of downstream demand on lead prices will come under scrutiny.

 

Tin: Three-month LME tin came off an intraday high of $18,230/mt to an intraday low of $18,090/mt before reversing some losses to end 0.28% firmer at $18,100/mt on Friday. It is likely to move between $18,000-18,200/mt today.

The most-liquid SHFE 2011 tin contract plunged to a session low of 141,940 yuan/mt after opening of the overnight trading, but later rebounded rapidly to touch a session high of 143,620 yuan/mt, before erasing some gains to end 0.7% higher at 143,390 yuan/mt on Friday night. Pressure above will be seen from 145,000 yuan/mt today.  

Market commentary
Zinc
Copper
Lead
Tin
Nickel
Aluminium

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