SMM Morning Comments (Jan 8): Shanghai base metals were mostly higher as Wall Street continued to sail to record highs

Published: Jan 8, 2021 10:00

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Shanghai base metals were mostly higher on Friday morning after stocks on Wall Street cruised to new record highs overnight. Meanwhile, their counterparts on the LME also rose for the most part.

SHANGHAI, Jan 8 (SMM) — Shanghai base metals were mostly higher on Friday morning after stocks on Wall Street cruised to new record highs overnight. Meanwhile, their counterparts on the LME also rose for the most part.

Shanghai base metals mostly advanced in overnight trading. Copper added 1.61%, aluminium rose 1.18%, lead increased 0.7%, zinc went up 1.05% and nickel strengthened 1.61%, while tin fell 0.44%.

The LME complex performed similarly on Thursday. Copper advanced 1.23%, tin edged up 0.33%, zinc climbed 0.8% and nickel increased 1.97%, while aluminium and lead underperformed with 0.17% and 0.73% losses respectively.

Copper: Three-month LME copper rose 1.23% to end at $8,172/mt on Thursday, and is likely to trade between $8,130-8,210/mt today.

The most-active SHFE 2103 copper contract went up 1.21% to close at 60,240 yuan/mt in overnight trading, and it is expected to move between 60,000-60,500 yuan/mt today, while spot premiums will be seen at 50-120 yuan/mt.

The US Congress confirmed that Biden was elected as the 46th President of the US, and Trump promised an orderly transfer of power. The Democratic Party will hold the White House and Congress at the same time, and a larger fiscal stimulus plan is expected. Investors are optimistic about the prospect that the Democratic Party will implement additional fiscal stimulus, and US stocks hit another record high. In addition, the ISM non-manufacturing PMI released last night in the US recorded 57.2, the highest since September last year. Today, the non-agricultural data of December will be released, waiting for the guidance of the non-agricultural report to the market. On the spot side, with a series of influences such as cold wave and pandemic, downstream processing will gradually decrease before the New Year. Inventory changes and fluctuations of the contract will be monitored, and premium was unlikely to remain high in the spot market as copper prices remained high.

Zinc: Three-month LME zinc rose 0.8% to close at $2,893/mt on Thursday. Zinc stocks at LME-listed warehouses fell 25 mt to 201,875 mt. Overnight, US stocks hit a new high, the US Congress confirmed Biden as president, and the Democratic Party controlled the White House and both houses of Congress, which made the market optimistic that Biden administration would implement more fiscal stimulus measures. However, the fermentation of overseas pandemics is expected to limit the increase of zinc prices. The contract is likely to trade between $2,840-2,890/mt today.

The most-liquid SHFE 2102 zinc contract rose 1.05% to end at 21,710 yuan/mt in overnight trading. Although domestic TC is still at a low level and zinc ore supply is tight, it has not been transmitted to smelters. According to SMM survey, it is predicted that refineries will still maintain high output in January and February, while downstream consumption is gradually weakening, which is expected to limit the upside space of zinc prices. Domestic pandemic situation will be monitored in the near term. The SHFE zinc contract is expected to move between 21,300-21,800 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 150-200 yuan/mt.

Nickel: The most-active SHFE 2103 nickel contract rose 1.61% to close at 133,510 yuan/mt on Thursday. Open interests rose 1,139 lots to 195,000 lots. Whether the contract could remain above 135,000 yuan/mt will come under scrutiny today.

Lead: Three-month LME lead settled 0.73% lower at $2,031.5/mt on Thursday. In order to obstruct the presidential certification, the US Congress is in turmoil, and political instability induces market risk aversion.

The most-active SHFE 2102 lead contract went up 0.7% to close at 15,125 yuan/mt on Thursday night. Overnight, Shanghai base metals continued to rise, giving lead some support.

Tin: Three-month LME tin closed up 0.33% at $21,160/mt on Thursday. The political situation in the US gradually became clear, and Congress confirmed Biden's election as president. The continued decline of LME tin inventories showed that the tight supply situation of refined tin overseas has not eased, and LME tin is expected to keep running at high under this support. Pressure above will be seen from $21,500 /mt today. Support below will be seen from $20,500/mt today.

The most-liquid SHFE 2103 tin contract fell 0.66% at 157,610 yuan/mt on Thursday night. The guidance provided by LME tin will be monitored today. Pressure above will be seen from 160,000 yuan/mt today. Support below will be seen from 155,000 yuan/mt today.

Market commentary Copper Aluminium Zinc Nickel Lead Tin

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