SMM Morning Comments (Feb 3): Base metals on LME rose broadly as investors watch for stimulus progress

Published: Feb 3, 2021 10:15
Nonferrous metals on the LME were mostly higher on Wednesday morning as investors are monitoring negotiations in Washington surrounding another stimulus package, while their counterparts on the SHFE also fell for the most part.

SHANGHAI, Feb 3 (SMM) — Nonferrous metals on the LME were mostly higher on Wednesday morning as investors are monitoring negotiations in Washington surrounding another stimulus package, while their counterparts on the SHFE also fell for the most part. 

Shanghai base metals fell for the most part in overnight trading. Copper shed 0.56%, aluminium weakened 0.79%, nickel declined 1.23% and tin slid 1.26%, while zinc advanced 0.49% and lead edged up 0.1%. 

The LME complex, except for aluminium, also cruised lower on Tuesday. Copper slipped 0.9%, zinc shed 0.21%, lead slid 0.96%, nickel pulled back 0.84% and tin weakened 0.5%, while aluminium gained 0.54%. 

Copper: Three-month LME copper declined 0.9% to close at $7,752/mt on Tuesday, while the most-active SHFE 2103 copper contract slid 0.56% to end at 57,290 yuan/mt in overnight trading after hitting a nearly two-month low at 56,920 yuan/mt earlier in the session. 

Investors are monitoring negotiations in Washington surrounding another stimulus package. President Joe Biden met with the 10 Republican senators on Monday to discuss an alternative, smaller aid proposal to his $1.9 trillion package. 

Trades were quiet in the spot market as many enterprises suspended production for the Chinese New Year (CNY) holiday earlier than previous years, and copper social inventories rose slightly this week.    

LME copper is expected to trade between $7,790-7,870/mt today, and SHFE copper between 57,100-57,600 yuan/mt, while spot copper will be traded between discounts of 30 yuan/mt and premiums of 70 yuan/mt.

Aluminium: Three-month LME aluminium bounced off a two-week low of $1,953/mt to an intraday high of $1,979/mt before relinquishing some gains to end 0.54% higher at $1,971/mt on Tuesday, with open interest adding 4,145 lots to 735,000 lots.

The most-liquid SHFE 2103 aluminium contract settled 0.79% lower at 14,975 yuan/mt in overnight trading, with open interest rising 2,989 lots to 168,000 lots, and is likely to move between 14,800-15,100 yuan/mt today, while spot premiums will be seen stable at 0-20 yuan/mt.

Zinc: Three-month LME zinc settled 0.21% lower at $2,569.5/mt on Tuesday, with open interest rising 1,627 lots to 235,000 lots. Zinc stocks across LME-listed warehouses dropped by 400 mt or 0.14% to 291,350 mt. Rising US dollar weighed on LME zinc overnight, but expectations of President Biden's stimulus plan are likely to limit its decline. LME zinc is likely to fluctuate between $2,550-2,600/mt today.

The most-traded SHFE 2103 zinc contract added 0.49% to close at 19,610 yuan/mt in overnight trading. Zinc concentrate remained in tight supply, while zinc consumption weakened as it is approaching the CNY holiday. Zinc prices are likely to continue to fluctuate range-bound in the short term amid weak demand and supply. The March contract is likely to move between 19,300-19,800 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen at 170-180 yuan/mt against the February contract.

Nickel: The most-liquid SHFE 2104 nickel contract fell 1.23% to end at 130,320 yuan/mt in overnight trading, with open interest increasing 14,000 lots to 157,000 lots.

Lead: Three-month LME lead weakened 0.96% to settle at $2,013.5/mt on Tuesday. LME lead stocks extended declines, shrinking 2,150 mt to 94,625 mt. 

The most-active SHFE 2103 lead contract inched up 0.1% to close at 15,000 yuan/mt in overnight trading after hitting a two-week low at 14,830 yuan/mt earlier in the session.

Tin: Three-month LME tin climbed to its highest since 2014 of $23,435/mt on Tuesday before giving up all the gains to end 0.5% lower at $22,955/mt. LME tin stocks extended declines to 790 mt. Tight tin supply is expected to underpin tin prices in the near term. LME tin is expected to trade between $22,500-24,000/mt today.

The most-active SHFE 2103 tin contract dropped 1.26% to end at 166,290 yuan/mt in overnight trading. It is likely to fluctuate between 162,000-170,000 yuan/mt today.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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SMM Morning Comments (Feb 3): Base metals on LME rose broadly as investors watch for stimulus progress - Shanghai Metals Market (SMM)