SMM Evening Comments (Feb 18): Shanghai nonferrous metals rose across the board after Lunar New Year holiday

SHANGHAI, Feb 18 (SMM) – SHFE nonferrous metals closed higher across the board on Thursday February 18.

Tin was the best performer with a rise of 5.78%. Copper advanced 5.15%, aluminium surged 4.1%, nickel climbed 2.58%, zinc increased 4.85% and lead went up 1.67%.

The ferrous complex rose across the board. Iron ore surged 7.05%, rebar rose 3.26%, and hot-rolled coil climbed 2.5%.

Copper: The most-traded SHFE 2104 copper contract finished the day 5.15% higher at 63,340 yuan/mt. Open interest rose 15,961 lots to 128,000 lots.

The severe cold weather in Texas was evolving into a crisis in the global oil market. Traders and industry executives estimated that the daily output of US crude oil would decrease by more than 4 million barrels, with a drop of nearly 40%. Global economic activities gradually recovered in the post-pandemic era, and crude oil prices rose all the way, which exceeded $60 /barrel, driving commodities to move up simultaneously. The Biden administration's 190 million stimulus bill was just around the corner. Economic data showed that retail sales increased by 5.3% in January, the biggest increase in seven months. Manufacturing output increased for the fourth consecutive month in January, exceeding expectations. Confidence of residential builders rose slightly in February. Market sentiment was extremely high, and LME and SHFE copper reached an eight-year high simultaneously.

The Federal Reserve's monetary policy meeting in January, various economic data, and whether the bullish sentiment could continue to ferment to make the contract maintain its upward trend again will come under scrutiny tonight.

Aluminium:The most-liquid SHFE 2103 aluminium contract finished the day 4.1% higher at 16,510 yuan/mt. Open interest fell 4,091 lots to 147,075 lots. Social inventories of primary aluminium across eight consumption areas in China, including SHFE warrants, expanded 126,000 mt during the Chinese New Year holiday to 901,000 mt as of February 18, and stocks in Wuxi, Nanhai and Gongyi mainly contributed to the increase.

Zinc: The most-active SHFE 2103 zinc contract climbed to an intraday high of 21,320 yuan/mt and closed up 4.85% at 21,295 yuan/mt. Open interest fell 2,770 lots to 63,726 lots. Global COVID-19 cases decreased from 800,000 to 400,000 in a single day during the CNY holiday, and the pandemic showed an obvious turning point. On fundamentals, the growth rate of inventories was less than the market expectation, and the consumption expectation improved, which boosted zinc prices. The pressure from the BOLL line will continue to be monitored tonight, and it is expected that zinc prices will keep fluctuating strongly.

Nickel: The most-traded SHFE 2104 nickel contract ended the day 2.58% higher at 138,590 yuan/mt today. Open interest rose 6,250 lots to 172,557 lots.

Lead: The most-traded SHFE 2103 lead contract ended the day 1.67% higher at 15,560 yuan/mt. Open interest fell 307 lots to 37,271 lots. On fundamentals, the accumulation of inventories after the holiday may put pressure on the contract to continue its upward movement. Social inventories of lead ingots across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin increased as expectations. The restocking demand at the beginning of the downstream resumption of work is slightly lower with shift production during the CNY on the supply end. Whether the contract could remain above 15,500 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2104 tin contract fell to a session low of 167,920 yuan/mt and finished the day 5.78% higher at 174,370 yuan/mt today. Open interest rose 9,530 lots to 34,570 lots. The market's worry about the shortage of tin supply at home and abroad attracted bulls to actively enter the market. It is expected that the contract will trade robustly in the near term. Pressure above will be seen from 175,000 yuan/mt today. Support below will be seen from 166,000 yuan/mt today.