SMM Morning Comments (Jan 11): Shanghai base metals fell across the board as investors awaited the release of Chinese inflation data for December

SHANGHAI, Jan 11 (SMM) — Nonferrous metals on both SHFE and LME declined across the board on Monday morning. Developments on the coronavirus front will likely continue to be monitored by investors and could weigh on sentiment.

Shanghai base metals fell across the board in overnight trading. Copper fell 0.62%, aluminium declined 1.49%, zinc shed 2.16%, tin weakened 1.62%, lead slid 2.46% and nickel edged down 2.64%.

The LME complex fell across the board on Friday. Zinc plunged 3.15% to lead the losses, copper fell 1.07%, aluminium weakened 0.39%, tin slid 0.73%, lead edged down 1.99% and nickel dropped 3.01%.

Copper: Three-month LME copper fell 1.07% to end at $8,084.5/mt on last Friday, and is likely to trade between $8,040-8,120/mt today.

The most-active SHFE 2103 copper contract went down 1.08% to close at 59,770 yuan/mt in overnight trading, and it is expected to move between 59,500-60,000 yuan/mt today, while spot premiums will be seen at 10-70 yuan/mt.

According to data released by the US Department of Labor on Friday, the nonfarm payrolls unexpectedly decreased by 140,000 in December, which was significantly lower than the expected increase of 50,000. As the pandemic continues to deteriorate, it has dealt a serious blow to employment, and the recovery of the labor market has stalled. At night, dragged down by nonfarm data, copper prices dropped sharply with the market cautious sentiment, while Biden proposed to introduce trillions of economic stimulus measures, and will announce the details of the stimulus plan next Thursday. Biden administration's economic stimulus plan offset the pessimism of negative nonfarm data. Under optimistic expectations, the three major indexes of US stocks hit a new closing high, and the decline of copper contract also narrowed. On the spot side, traders lack the willingness to receive goods and have a strong sense of avoiding risks.

Zinc: Three-month LME zinc fell 3.25% to close at $2,799/mt on last Friday. Last Friday, the US dollar index rose strongly, and the nonfarm payrolls report of the US in December was negative. Doubts about how many infrastructure stimulus measures can be introduced by the next U.S. government, which is about to take office, intensified in the market, and the market optimism cooled down. However, the expectation of the new US government to increase the stimulus policy is expected to limit its decline. The final details of Biden's economic stimulus measures will be monitored in the near term. The contract is likely to trade between $2,800-2,850/mt today.

The most-liquid SHFE 2102 zinc contract fell 2.64% to end at 21,060 yuan/mt in overnight trading. The impact of domestic pandemic led to a strong wait-and-see sentiment in the downstream amid the off-season of consumption with weak orders, increased social inventories and insufficient support from the consumption side. However, the tight ore end and low TC limited the downward space of zinc prices. The SHFE zinc contract is expected to move between 21,000-21,500 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 100-120 yuan/mt.

Nickel: The most-active SHFE 2103 nickel contract fell 2.16% to close at 129,940 yuan/mt on last Friday. Open interests fell 2,549 lots to 182,000 lots. The contract will test support from 130,000 yuan/mt today.

SHFE nickel is expected to trade between 129,000-134,500 yuan/mt and LME nickel is expected to trade between $17,300-18,200/mt this week.

Lead: Three-month LME lead settled 1.72% lower at $1,996.5/mt on last Friday. On Friday night, the US dollar index rose again, and the market gradually digested the good news such as the weakening expectation of the US dollar index and the expectation of economic recovery. The overseas market's doubts about the new infrastructure in the US increased, and the LME base metal generally fell, which dragged down LME Lead which fell for two consecutive days.

The most-active SHFE 2102 lead contract trended lower on Friday night, ending 2.46% lower at 14,670 yuan/mt. The contract will test support from 146,000 yuan/mt today.

Tin: Three-month LME tin closed down 0.73% at $21,005/mt on last Friday. The US dollar index rose on Friday, after the negative December nonfarm payrolls report in the US raised people's expectation of introducing further stimulus measures to support the economy hit by the pandemic and related blockade measures. The market is waiting for the final details of the Biden administration's economic stimulus measures. The US dollar fell briefly after the employment report was released, and then continued to rise, as people increasingly expected to introduce additional stimulus measures to help support the economy until the vaccination process allowed the blockade measures to be relaxed. The trend of US dollar and the guidance of market sentiment on the trend of LME tin will be monitored. The tight supply of overseas refined tin still supports the trend of LME tin. 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 2.31% at 154,990 yuan/mt on Friday night. The contract will test support from 155,000 yuan/mt today. Pressure above will be seen from 160,000 yuan/mt today. Support below will be seen from 154,000 yuan/mt today.