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SMM Morning Comments (Jan 15): Shanghai base metals were mostly higher as investors reacted to Biden's $1.9 trillion stimulus plan
Jan 15,2021 10:00CST
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Source:SMM
Shanghai base metals were mostly higher on Friday morning as investors reacted to the release of US President-elect Joe Biden's $1.9 trillion coronavirus rescue package. Meanwhile, their counterparts on the LME traded mixed.

SHANGHAI, Jan 15 (SMM) — Shanghai base metals were mostly higher on Friday morning as investors reacted to the release of US President-elect Joe Biden's $1.9 trillion coronavirus rescue package. Meanwhile, their counterparts on the LME traded mixed.

Shanghai base metals mostly advanced in overnight trading. Copper added 0.94%, aluminium rose 0.88%, lead increased 0.81%, tin went up 0.59% and nickel strengthened 3.18%, while zinc fell 0.1%.

The LME complex closed mixed on Thursday. Lead slid 1.42%, aluminium declined 0.3% and zinc weakened 0.6%, while tin climbed 0.79%, copper rose 1.42% and nickel increased 3.56%.

Copper: Three-month LME copper rose 1.42% to end at $8,084/mt on Thursday, and is likely to trade between $8,050-8,130/mt today.

The most-active SHFE 2103 copper contract went up 0.94% to close at 59,290 yuan/mt in overnight trading, and it is expected to move between 59,100-59,600 yuan/mt today, while spot premiums will be seen at 60-130 yuan/mt.

Federal Reserve Chairman Powell said that the Federal Reserve will continue to maintain ultra-loose policy and will maintain low interest rates for a longer period of time. Powell's speech consolidated the market's hope for a lower interest rate environment, while US President-elect Biden was about to announce a $1.9 trillion economic rescue bill, placing optimistic expectations on investors, and copper futures rose sharply at night. In terms of spot prices, base metals rose sharply at night with limited market supply. Traders had a strong sentiment of holding prices in the market.

Zinc: Three-month LME zinc fell 0.6% to close at $2,754.5/mt on Thursday. Zinc stocks at LME-listed warehouses fell 500 mt to 199,175 mt. Overnight, the dollar rose, putting pressure on the trend of LME zinc. The soaring cases of COVID-19 infection in Europe and the implementation of a new round of blockade in China raised market worries. However, US President-elect Biden may launch a stimulus plan with a scale of 2 trillion US dollars, and Federal Reserve Chairman Powell said that he would continue to maintain loose monetary policy to limit its decline. The contract is likely to trade between $2,710-2,760/mt today.

The most-liquid SHFE 2103 zinc contract fell 0.12% to end at 20,610 yuan/mt in overnight trading. Overnight, the favorable US economic stimulus policy and loose monetary policy boosted the risk appetite, but the reduction on the supply side was less than expected on the fundamentals, and the consumption side was disturbed by the pandemic. Most enterprises may have a large reduction in early holiday, and the fundamentals are weak. It is expected that zinc prices will still fluctuate weakly in the near term. The SHFE zinc contract is expected to move between 20,300-20,800 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 170-180 yuan/mt.

Nickel: The most-active SHFE 2103 nickel contract rose 3.18% to close at 134,990 yuan/mt on Thursday. Open interests rose 26,000 lots to 224,000 lots. Whether the contract could maintain its upward trend and move above 135,000 yuan/mt will come under scrutiny today.

Lead: Three-month LME lead settled 1.42% lower at $2,062.5/mt on Thursday. Overnight, the US dollar index fluctuated strongly, and LME lead fell under pressure. The market is optimistic about the upcoming Biden administration's stimulus plan. The impact of overseas pandemic on economic recovery expectations should be monitored in the near term.

The most-active SHFE 2103 lead contract went up 0.91% to close at 14,980 yuan/mt on Thursday night. Overnight, Shanghai base metals continued to rise, giving lead some support. Overnight, the general increase of domestic nonferrous metals boosted the short-term surge of lead, and finally rose slightly, moving back above the moving average. Guizhou's environmental impact has not been eliminated and the supply of secondary lead is limited by low profits, but the downstream is about to enter the off-season of consumption, and the rebound momentum of SHFE lead is slightly insufficient. The contract is likely to continue to fluctuate at a high level.

Tin: Three-month LME tin closed up 0.79% at $21,085/mt on Thursday. The US dollar index fell by 0.11% to 90.23, once falling by 0.28%. However, driven by the optimistic expectation of US President-elect Biden's fiscal stimulus plan, the US dollar rose for most of Thursday, in line with the trend of US Treasury bond yields. But when Powell spoke, the dollar changed its direction as Powell said that he would not raise interest rates until he saw worrying inflation or imbalance, and although prices may face upward pressure in the near term, the central bank has the necessary tools to eliminate undesirable price increases. LME tin stocks continued to drop to 1,660 mt. The tight supply of refined tin overseas supported the trend of LME tin, and the contract is expected to fluctuate strongly. 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 0.38% at 154,050 yuan/mt on Thursday night. The guidance given by the trend of LME tin and its surrounding markets will be monitored. SHFE tin 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
Copper
Aluminium
Zinc
Nickel
Lead
Tin

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