SMM Evening Comments (Feb 22): Shanghai nonferrous metals rose across the board for the 3rd day

SHANGHAI, Feb 22 (SMM) – SHFE nonferrous metals closed higher across the board on Monday February 22, extending increases from last Friday, as China left its benchmark lending rate unchanged over the weekend.

China kept the one-year loan prime rate (LPR) unchanged at 3.85%, largely in line with expectations of traders and analysts in a snap poll. The five-year LPR was also kept steady at 4.65%. The LPR is a lending reference rate set monthly by 18 banks.

Tin was the best performer with a rise of 6.12%. Copper surged 5.99%, aluminium advanced 1.27%, nickel climbed 2.95%, zinc increased 2.28% and lead went up 2.13%.

The ferrous complex also rose across the board. Iron ore increased 1.74%, rebar rose 1.1%, and hot-rolled coil climbed 2.68%.

Copper: The most-traded SHFE 2104 copper contract finished the day 5.99% higher at 67,320 yuan/mt. Open interest rose 3,939 lots to 152,000 lots.

Global economic recovery brought about a rebound in demand, which accounted for the rise in commodity prices. Copper, as a representative, hit a high point since September 2011. Global economic stimulus policy did not changed, and the key economies such as Japan and Australia were still in loose policy, which would naturally bring potential inflation trend. This also accounted for global capital markets generally betting on the commodity sector.

The trend of LME copper will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2104 aluminium contract finished the day 1.27% higher at 16,735 yuan/mt. Open interest rose 22,214 lots to 323,511 lots.

Zinc: The most-active SHFE 2104 zinc contract climbed to an intraday high of 22,220 yuan/mt and closed up 2.28% at 21,965 yuan/mt. Open interest rose 3,932 lots to 64,354 lots. Biden made a speech at the weekend, proposing a new round of 2 trillion stimulus bill to boost market inflation and strengthen zinc prices.

Nickel: The most-traded SHFE 2104 nickel contract ended the day 2.95% higher at 146,230 yuan/mt today. Open interest fell 4,190 lots to 146,230 lots.

Lead: The most-traded SHFE 2104 lead contract slid to a session low of 15,600 yuan/mt and ended the day 2.13% higher at 15,570 yuan/mt. Open interest rose 5,956 lots to 27,193 lots. The spot market gradually resumed trading, but the spot market was mainly wait-and-see for lead ingots at high prices, with limited purchase, and the intention of smelter brand lead delivery is on the high side. Although the recent market of lead contracts is dominated by macro sentiment, it is still necessary to be alert to the risk of callback under high pressure. Whether the contract could remain above 15,900 yuan/mt will be monitored tonight.

Tin: The most-liquid SHFE 2104 tin contract fell to a session low of 182,000 yuan/mt and finished the day 6.12% higher at 192,770 yuan/mt today. Open interest fell 2,133 lots to 41,313 lots. Pressure above will be seen from 200,000 yuan/mt today. Support below will be seen from 175,500 yuan/mt today.