SMM Morning Comments (Jan 14): Shanghai base metals were mostly higher as investors awaited China's trade data for December

SHANGHAI, Jan 14 (SMM) — Nonferrous metals on the SHFE were mostly higher on Thursday morning, and their counterparts on the LME mostly cruised lower, as investors awaited the release of Chinese trade data for December and monitored vaccine rollouts and coronavirus containment measures.

Shanghai base metals mostly advanced in overnight trading. Lead increased 2.09%, zinc went up 0.1% and nickel strengthened 0.18%, while copper remained unchanged, aluminium fell 1.28% and tin weakened 0.53%.

The LME complex ended mostly lower on Wednesday. Copper edged down 0.34%, zinc weakened 0.48%, aluminium lost 0.62% and tin shed 0.4%, while nickel remained unchanged and lead added 0.94%.

Copper: Three-month LME copper fell 0.34% to end at $7,971/mt on Wednesday, and is likely to trade between $7,950-8,030/mt today.

The most-active SHFE 2103 copper contract went up 0.1% to close at 58,840 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 60-130 yuan/mt.

Biden will announce the economic reconstruction plan on Thursday, and Schumer, the leader of the Democratic Party in the Senate, urged him to propose a rescue plan with a scale of over $1.3 trillion. The market expects to increase government expenditure and hopes that the economy will continue to recover after the COVID-19 crisis. Optimism boosted copper futures, but on the other hand, the US dollar rebounded from the low point and strengthened again, which put some pressure on copper futures. On the spot side, except for transactions under long-term contracts, the overall trading volume in the market is declining. As the buying interest is obviously weakened, the overall price-holding sentiment of cargo holders is not high. It is expected that the spot premium will continue to fluctuate around 100 yuan before delivery, but with the passage of time, the off-season effect of downstream consumption will gradually manifest as the traditional New Year approaches after delivery.

Zinc: Three-month LME zinc fell 0.48% to close at $2,771/mt on Wednesday. Zinc stocks at LME-listed warehouses fell 425 mt to 199,675 mt. The US House of Representatives voted on impeaching US President Trump for the second time. The situation of the COVID-19 in the US is still grim, and the number of deaths soared. The Beige Book of the Federal Reserve said that the COVID-19 reignited the optimism. However, Biden's government is expected to introduce more fiscal stimulus measures, which is expected to push up inflation. There is still upward momentum for LME zinc. Specific fiscal stimulus proposals of Biden administration will be monitored in the near term. The contract is likely to trade between $2,760-2,810/mt today.

The most-liquid SHFE 2103 zinc contract rose 0.17% to end at 20,830 yuan/mt in overnight trading. The supply side is relatively stable, however, the pandemic in northern China is still severe, and some enterprises have taken maintenance holidays in the middle and late January, which has dragged down downstream consumption. It is expected that zinc prices will fluctuate within a narrow range in the near term. The support from the 60-day moving average will be monitored in the near term. 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 160-180 yuan/mt.

Nickel: The most-active SHFE 2103 nickel contract rose 0.18% to close at 130,060 yuan/mt on Wednesday. Open interests rose 2,947 lots to 185,000 lots.

Lead: Three-month LME lead settled 0.94% higher at $2,049/mt on Wednesday.

The most-active SHFE 2103 lead contract went up 2.09% to close at 14,910 yuan/mt on Wednesday night. The regional tightness of secondary lead in the market and the expectation of restocking before the holiday still exist. Whether the contact could move back above the moving average will be monitored today. Pressure above will be seen from 15,000 yuan/mt in the short term.

Tin: Three-month LME tin closed down 0.4% at $20,920/mt on Wednesday. The tight supply of refined tin overseas still supports LME tin. The trend of the US dollar and the guidance of surrounding markets on LME tin will be monitored. 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 0.37% at 152,670 yuan/mt on Wednesday night. The contract is expected to keep fluctuating weakly today. Pressure above will be seen from 155,000 yuan/mt today. Support below will be seen from 152,000 yuan/mt today.