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SMM Morning Comments (Jan 27): Shanghai base metals were mostly higher as IMF raised global economic growth forecast
Jan 27, 2021 10:00CST
Source:SMM
Shanghai base metals were mostly higher on Wednesday morning as the International Monetary Fund (IMF) raised its growth forecast for the global economy this year. Meanwhile, their counterparts on the LME set for a mixed start.

SHANGHAI, Jan 27 (SMM) — Shanghai base metals were mostly higher on Wednesday morning as the International Monetary Fund (IMF) raised its growth forecast for the global economy this year. Meanwhile, their counterparts on the LME set for a mixed start.

Shanghai base metals mostly advanced in overnight trading. Copper advanced 0.24%, tin edged up 0.8% and lead climbed 1.16%, while aluminium remained unchanged, zinc and nickel underperformed with 1.48% and 1.19% losses respectively.

The LME complex closed mixed on Tuesday. Tin was the best performer with a rise of 1.78%. Aluminium advanced 0.15%, lead edged up 0.56%, while copper slid 0.13%, nickel declined 1.12% and zinc weakened 1.7%.

Copper: Three-month LME copper fell 0.13% to end at $7,995/mt on Tuesday, and is likely to trade between $7,960-8,040/mt today.

The most-active SHFE 2103 copper contract went up 0.82% to close at 58,950 yuan/mt in overnight trading, and it is expected to move between 58,800-59,300 yuan/mt today, while spot premiums will be seen at 50-110 yuan/mt.

The Fed meeting is coming to an end, and the market expects that the Fed will keep the current interest rate unchanged. Dove expectations and the worry that the new round of stimulus bill in the US will be delayed will put some pressure on copper futures. However, the US dollar index fell back at night, which limited the decline of copper futures to a certain extent, and the focus of copper futures at night rose. On the spot side, the market activity declined further, and the trading volume in the market was light with limited transaction.

Aluminium: Three-month LME aluminium climbed 0.15% to close at $2,023/mt on Tuesday, with open interest falling to 739,000 lots. It is expected to trade between $1,990-2,050/mt today. 

The most-liquid SHFE 2013 aluminium contract remained unchanged to settle at 14,880 yuan/mt on Tuesday night, and is likely to trade between 14,500-15,000 yuan/mt today. The downstream consumption of aluminium weakened amid tepid spot market. Spot premiums for the contract will be seen higher at 60-120 yuan/mt.

Zinc: Three-month LME zinc fell 1.7% to close at $2,654.5/mt on Tuesday. Zinc stocks at LME-listed warehouses rose 45,250 mt to 235,025 mt. LME inventory recorded the largest increase since March 2018. There are more than 100 million confirmed cases of the COVID-19 in the world, and the market is worried about the prospect of a new round of COVID-19 aid program in the US. LME zinc was under pressure all the way down, but the slight weakening of the US dollar combined with the improvement of consumer confidence in the US in January, limiting its decline. The change of Fed interest rate will be monitored today. The contract is likely to trade between $2,660-2,710/mt today.

The most-liquid SHFE 2103 zinc contract fell 1.48% to end at 19,935 yuan/mt in overnight trading. The US planned to confront China in a new way. The market was worried about the deterioration of China-US trade relations, while domestic zinc consumption continued to weaken before the Spring Festival, which dragged down zinc prices. Inventory accumulation will be monitored in the near term. The SHFE zinc contract is expected to move between 19,800-20,300 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 150-160 yuan/mt.

Nickel: The most-active SHFE 2103 nickel contract fell 1.19% to close at 133,850 yuan/mt on Tuesday. Open interests fell 9,724 lots to 145,000 lots.

Lead: Three-month LME lead settled 0.56% higher at $2,078/mt on Tuesday. LME Lead stocks decline sharply for several consecutive days, with LME lead stocks decreasing 2,675 mt to 110,500 mt overnight. Combined with overseas vaccines and optimistic expectations of economic recovery, LME Lead is expected to continue to fluctuate at high.

The most-active SHFE 2103 lead contract went up 1.16% to close at 15,645 yuan/mt on Tuesday night. The holiday progress of enterprises at both ends of supply and demand should be monitored in the near term.

Tin: Three-month LME tin closed up 1.78% at $22,870/mt on Tuesday. LME low inventory and high spot premium showed the supply shortage in overseas refined tin market, supporting the high operation of LME tin. Pressure above will be seen from $23,000 /mt today. Support below will be seen from $21,500/mt today.

The most-liquid SHFE 2103 tin contract rose 0.98% at 172,160 yuan/mt on Tuesday night. The recent reduction in domestic circulation spot and the release of pre-holiday stockpiling demand have certain support for SHFE tin. Pressure above will be seen from 175,000 yuan/mt today. Support below will be seen from 167,500 yuan/mt today.

Market commentary
Copper
Aluminium
Zinc
Nickel
Lead
Tin

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