SMM Morning Comments (Jan 18) Shanghai base metals set for a mixed start ahead of China’s fourth-quarter GDP data release

SHANGHAI, Jan 18 (SMM) — Shanghai base metals and their counterparts on the LME set for a mixed start on Monday morning. China is going to release its total retail sales of consumer goods for December and fourth-quarter GDP today.  

Shanghai base metals mostly closed lower last Friday night. Copper slid 1.13%, lead edged down 0.07%, zinc shed 1.53% and nickel weakened 1.07%, while aluminium firmed 0.37% and tin rose 1.4%. 

The LME complex fell for the most part last Friday. Copper weakened 1.86%, aluminium declined 1.29%, lead slid 1.44%, zinc plunged 2.49% and nickel slipped 1.47%, while tin gained 0.19%. 

Copper: Three-month LME copper ended 1.86% lower at $ 7,934/mt last Friday, while the most-traded SHFE 2103 copper contract fell 1.13% to close at 58,560 yuan/mt last Friday night. US retail sales declined further in December as renewed measures to slow the spread of COVID-19 undercut spending at restaurants and reduced traffic to shopping malls, the latest sign the economy lost considerable speed at the end of 2020. Retail sales dropped 0.7% last month, the Commerce Department said on Friday. Data for November was revised down to show sales declining 1.4% instead of 1.1% as previously reported.  The US dollar index increased as COVID-19 continues to spread around the world, which pressured copper prices. LME copper is expected to trade between $7,900-7980/mt today, and SHFE copper between 58,200-58,700 yuan/mt, while spot copper will be traded at premiums of 50- 110 yuan/mt.

Aluminium: The most-liquid SHFE 2103 aluminium contract rose 0.37% to settle at 14,915 yuan/mt last Friday night, with open interest rising 4,529 lots to 143,000 lots, and is expected to move between 14,900-15,100 yuan/mt today.

Three-month LME aluminium closed 1.29% lower at $1,982/mt last Friday amid tepid US retail sales data, with open interest increasing 2,467 lots to 750,000 lots. It is likely to fluctuate between $1,950-2,010/mt today.

Nickel: The most-active SHFE 2103 nickel contract settled 1.07% lower at 132,820 yuan/mt last Friday night, with open interest decreasing 6,671 lots to 195,000 lots.

Zinc: Three-month LME zinc declined 2.49% to end at $2,686/mt on last Friday, after hitting a nearly two-month low at $2,682/mt earlier in the session, posting a three-day losing streak. Zinc stocks across LME-listed warehouses fell by 475 mt to 198,700 mt. The US dollar strengthened last Friday amid weak US economic data, but President-elect Joe Biden’s economic stimulus plan will limit the decline in zinc prices. LME zinc is expected to fluctuate between $2,680-2730/mt today.

The most-traded SHFE 2103 zinc contract closed 1.53% lower at 20,225 yuan/mt last Friday night, with open interest rising 6,885 lots to 86,625 lots, posting a six-day losing streak. Galvansing producers in north China suspended production earlier than in previous years due to a resurgence of COVID-19 cases. Weak consumption may weigh on zinc prices in the near term. The March contract is likely to move between 20,000-20,500 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 150-160 yuan/mt against the February contract.

Lead: Three-month LME lead slid 1.44% to end at $1,991/mt last Friday. Stronger US dollar index and expectations of stricter lockdown measures under the Biden administration weighed on lead prices. 

The most-liquid SHFE 2103 lead contract edged down 0.07% to settle at 14,935 yuan/mt last Friday night. It is likely to trade between 14,550-15,050 yuan/mt today.

Tin: Three-month LME tin added 0.19% to close at $21,125/mt last Firday. LME tin stocks extended declines to 1,635 mt. Tight tin supply overseas will underpin tin prices in the near term. LME tin is expected to trade between $20,500-21,500/mt today.

The most-liquid SHFE 2103 tin contract gained 1.4% to end at 156,210 yuan/mt last Friday night.   Expectations of a tightening tin ore supply and continued decline in social inventories of tin ingots are likely to support tin prices. SHFE tin is expected to move between 154,000-160,000 yuan/mt today.