SMM Morning Comments (Feb 4): LME nonferrous metals set for a mixed start as investors await US weekly jobless data

Published: Feb 4, 2021 10:10
Shanghai base metals were mostly higher on Thursday morning, holding onto overnight gains, while their counterparts on the LME set for a mixed start, as investors are waiting for the US jobless data.

SHANGHAI, Feb 4 (SMM) — Shanghai base metals were mostly higher on Thursday morning, holding onto overnight gains, while their counterparts on the LME set for a mixed start, as investors are waiting for the US jobless data. 

Shanghai base metals rose for the most part in overnight trading. Copper rose 1%, aluminium gained 1.37%, zinc increased 1.76% and lead firmed 0.47%, while nickel shed 0.15% and tin weakened 0.96%.

The LME complex performed similarly on Wednesday. Copper rose 1.24%, aluminium added 0.28%, zinc surged 2.47% and lead advanced 0.6%, while nickel slid 0.73% and tin edged down 0.02%. 

Copper: Three-month LME copper rose 1.24% to close at $7,848/mt on Wednesday, while the most-traded SHFE 2103 copper contract settled 1% higher at 57,700 yuan/mt in overnight trading. US improved ISM non-manufacturing purchasing managers’ index (PMI) and ADP employment data suggested a continuous economic recovery, which drove up bullish sentiment in the market. Oil prices rose almost 2% on Wednesday and hovered near their highest levels in about a year, after government data showed U.S. crude stockpiles fell to their lowest since March, while OPEC+ maintained its supply cut agreement, and this also bolstered copper prices. LME copper is expected to trade between $7,810-7,890/mt today, and SHFE copper between 57,600-58,100 yuan/mt, while spot copper will be traded between discounts of 40 yuan/mt and premiums of 90 yuan/mt.

Aluminium: Three-month LME aluminium firmed 0.28% to end at $1,976.5/mt on Wednesday, with open interest decreasing 1,780 lots to 733,000 lots.

The most-traded SHFE 2103 aluminium contract trended higher in overnight trading, closing 1.37% firmer at 15,190 yuan/mt, with open interest decreasing 2,808 lots to 164,000 lots. It is likely to move between 14,900-15,200 yuan/mt today, while spot premiums will be seen at 0-20 yuan/mt.

Zinc: Three-month LME zinc climbed to a one week high of $2,634/mt on Wednesday before paring some gains to end 2.47% higher at $2,633/mt, with open interest decreasing 1,141 lots to 234,000 lots. Zinc stocks across LME-listed warehouses dropped by 450 mt or 0.15% to 290,900 mt. Driven by upbeat US ISM services and ADP employment data, Fed officials expect unemployment rate to fall rapidly. In addition, Democrats in the US Congress took the first steps toward advancing President Joe Biden’s proposed $1.9 trillion coronavirus aid plan without Republican support, which also boosted market sentiment. LME zinc is likely to fluctuate between $2,580-2630/mt today.

The most-traded SHFE 2103 zinc contract advanced 1.76% to close at 19,925 yuan/mt, with open interest losing 4,770 lots to 89,086 lots. Tight zinc concentrate supply, strong demand for galvanised plate and optimism over zinc consumption after the Chinese New Year (CNY) holiday supported zinc prices. The March contract is likely to move between 19,500-20,000 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen at 100-120 yuan/mt against the March contract.

Nickel: The most-liquid SHFE 2104 nickel contract shed 0.15% to settle at 130,090 yuan/mt in overnight trading.

Lead: Three-month LME lead fell to a two-week low of $2,001/mt before rebounding to end 0.6% firmer at $2,025.5/mt on Wednesday. LME lead stocks shrank by 600 mt to 94,025 mt. The impact of economic recovery overseas and future consumption of automobiles on LME lead will be monitored. 

The most-liquid SHFE 2103 lead contract gained 0.47% to close at 15,025 yuan/mt in overnight trading. SHFE lead is expected to remain weak ahead of the CNY holiday.

Tin: Three-month LME tin edged down 0.02% to settle at $22,950/mt on Wednesday. LME tin stocks still hovered at low levels, and tight supply will be supportive to prices in the short term. LME tin is likely to move between $22,500-24,000/mt today. 

The most-liquid SHFE 2103 tin contract weakened 0.96% to end at 164,520 yuan/mt in overnight trading. It is likely to trade between 162,000-168,000 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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