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SMM Morning Comments (Jan 13): Shanghai base metals were mostly higher as investors focused on coronavirus and US politics
Jan 13,2021 10:00CST
SMM Comments
Source:SMM
Nonferrous metals on the SHFE were mostly higher on Wednesday morning, and their counterparts on the LME rose across the board, as investors watched for developments on the coronavirus front.

SHANGHAI, Jan 13 (SMM) — Nonferrous metals on the SHFE were mostly higher on Wednesday morning, and their counterparts on the LME rose across the board, as investors watched for developments on the coronavirus front.

Shanghai base metals mostly advanced in overnight trading. Tin added 0.35%, copper rose 0.65%, lead increased 0.86%, zinc went up 0.22% and nickel strengthened 2.19%, while aluminium fell 0.27%.

The LME complex rose across the board on Tuesday. Nickel was the best performer with a rise of 3.51%. Lead advanced 3.23%, tin edged up 1.47%, aluminium climbed 0.85%, zinc increased 0.61% and copper went up 1.71%.

Copper: Three-month LME copper rose 1.95% to end at $7,998.5/mt on Tuesday, and is likely to trade between $7,970-8,050/mt today.

The most-active SHFE 2103 copper contract went up 0.05% to close at 58,740 yuan/mt in overnight trading, and it is expected to move between 58,600-59,100 yuan/mt today, while spot premiums will be seen at 90-160 yuan/mt.

Fed officials believe that it is too early to discuss reducing bond purchases, and the US dollar index has weakened sharply due to the sharp drop in US bond yields. In addition, it was announced last night that API crude oil inventories unexpectedly decreased by 5.821 million barrels as of January 8 in the US, which injected optimism into the market with the market expectation of Biden's government's further economic stimulus plan, leading US oil prices to once reach a new high. On the spot side, the drop in copper price stimulated traders and large-scale processing enterprises to restock, which boosted the activity of copper spot market, and the trading volume obviously recovered. Inventories remained at a historical low level as there is still a certain rigid demand of the downstream, and it is expected that the spot prices will remain high before delivery this week.

Zinc: Three-month LME zinc rose 0.98% to close at $2,784.5/mt on Tuesday. Zinc stocks at LME-listed warehouses fell 1,025 mt to 200,100 mt. Overnight, the US dollar index fell, and LME base metals rose across the board. US President-elect Biden said that he would implement a new trillion-dollar stimulus plan to boost market optimism. However, the continuation of the pandemic blockade in many overseas countries is expected to limit the upside room of LME zinc. The contract is likely to trade between $2,760-2,810/mt today.

The most-liquid SHFE 2102 zinc contract rose 0.22% to end at 20,835 yuan/mt in overnight trading. In December, the domestic credit growth slowed down, the policy support tended to be normal, and the TC stopped falling and stabilised on the fundamentals. The supply side was relatively stable. However, according to SMM survey, the galvanized and die-casting sectors in China declined to varying degrees in January, and the consumption of galvanized plants in North China was weaker under the control of pandemic situation, and the support of the consumer side was insufficient. The SHFE zinc contract is expected to move between 20,600-21,100 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 190-200 yuan/mt.

Nickel: The most-active SHFE 2103 nickel contract rose 2.19% to close at 129,970 yuan/mt on Tuesday. Open interests rose 1,342 lots to 170,000 lots. Nickel led the gains as the US dollar index fluctuated downwards and the mining end rumored that some areas of Tawei suspended mining. The contract will test pressure from 130,000 yuan/mt today.

Lead: Three-month LME lead settled 2.78% higher at $2,030/mt on Tuesday.

The most-active SHFE 2103 lead contract went up 0.65% to close at 14,640 yuan/mt on Tuesday night. The recent weak domestic consumption and slight increase of stocks still make the rebound momentum of SHFE lead slightly insufficient, and it is expected to keep fluctuating below the moving average.

Tin: Three-month LME tin closed up 1.42% at $21,005/mt on Tuesday. The US dollar index fell on Tuesday, and the recent rally driven by the soaring US bond yields seems to have lost momentum. According to CME's "Fed Observation": the probability of the Fed maintaining interest rates in the range of 0%-0.25% in January this year is 100%, and the probability of raising interest rates by 25 basis points to the range of 0.25%-0.50% is 0%. In March this year, the probability of keeping interest rate in the range of 0%-0.25% was 100%, and the probability of raising interest rate by 25 basis points was 0%. The trend of the US dollar and the guidance of the surrounding markets on the trend of LME tin will be monitored. The tight supply of refined tin overseas still supports the contract. 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 rose 0.24% at 153,610 yuan/mt on Tuesday night. The contract is expected to keep fluctuating today. Pressure above will be seen from 156,000 yuan/mt today. Support below will be seen from 152,000 yuan/mt today.

Market commentary
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Aluminium
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Lead
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