SMM Morning Comments (Feb 26): Shanghai base metals were mostly lower following overnight Wall Street plunge amid rising bond yields

SHANGHAI, Feb 26(SMM) — Nonferrous metals on the SHFE and LME fell for the most part on Friday morning following an overnight drop on Wall Street as a rapid rise in bond yields rattled investor sentiment.

Shanghai base metals, except for aluminium and zinc, closed lower in overnight trading. Copper fell 1.13%, nickel shed 1.98%, lead weakened 1.04% and tin slid 0.92%, while aluminium rose 1.39% and zinc added 0.39%. 

The LME complex, except for aluminium and lead, weakened on Thursday. Copper declined 1.5%, zinc shed 0.16%, nickel tumbled 4.88% and tin fell 1.91%, while aluminium advanced 0.7% and lead gained 0.28%. 

Copper: Three-month LME copper fell 1.5% to close at $9,355/mt on Thursday, while the most-active SHFE 2104 copper contract ended 1.13% lower at 69,360 yuan/mt in overnight trading.

The 10-year US Treasury yield briefly topped the 1.6% level on Thursday and traded at its highest level in more than a year, and the 5-year US Treasury yield broke above the 0.75% mark. The US three major stock indexes all closed lower on Thursday, while the US dollar index lifted off a seven-week low, which weighed on copper prices.  

LME copper is expected to trade between $9,290-9,380/mt today, and SHFE copper between 68,900-69,500 yuan/mt, while spot copper will be traded between discounts of 180-90 yuan/mt.

Aluminium: Three-month LME aluminium gained 0.7% to close at $2,218.5/mt on Thursday, and is likely to move between $2,180-2,240/mt today.

The most-active SHFE 2104 aluminium contract rose 1.39% to end at 17,470 yuan/mt in overnight trading, and is expected to fluctuate between 17,000-17,400 yuan/mt today.

Zinc: Three-month LME zinc shed 0.16% to settle at $2,863.5/mt on Thursday, with open interest decreasing 2,577 lots to 237,117 lots. Zinc stocks across LME-listed warehouses dipped 50 mt or 0.02% to 270,475 mt. Federal Reserve Chair Jerome Powell reiterated on Wednesday that the U.S. central bank would not tighten its policy until the economy improves. Treatment charges for zinc concentrate are expected to extend declines amid tight concentrate supply, and zinc ingot output is likely to shrink further. LME zinc is likely to move between $2,830-2,880/mt today.

The most-liquid SHFE 2104 zinc contract added 0.39% to close at 21,760 yuan/mt in overnight trading. Zinc prices are likely to strengthen in March and April as downstream consumption improves. The April zinc contract is likely to move between 21,400-21,900 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen at 40-50 yuan/mt against the March contract.

Nickel: The most-active SHFE 2104 nickel contract slid 1.98% to end at 142,220 yuan/mt, with open interest decreasing 7,143 lots to 138,000 lots.

Lead: Three-month LME lead advanced 0.28% to settle at $2,145/mt on Thursday.  

The most-liquid SHFE 2104 lead contract closed 1.04% lower at 15,715 yuan/mt in overnight trading.  

Tin: Three-month LME tin fell 1.91% to end at $26,400/mt on Thursday. LME tin stocks expanded 75 mt to 1,740 mt. LME tin is expected to remain high, moving between $25,000-28,000/mt today, as global tin supply has yet to rise significantly.

The most-active SHFE 2104 tin contract declined 0.92% to settle at 190,020 yuan/mt in overnight trading, with open interest losing 1,460 lots to 24,807 lots. Domestic tin concentrate supply remained tight even as treatment charges increased. The April tin contract is likely to trade between 180,000-200,000 yuan/mt today.