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SMM Morning Comments (Mar 5): Nonferrous metals on both LME and SHFE fell across the board
Mar 5,2021 10:00CST
SMM Comments
Source:SMM
Nonferrous metals on both SHFE and LME declined across the board on Friday morning as investors watched bond yields as well as technology stocks

SHANGHAI, Mar 5 (SMM) — Nonferrous metals on both SHFE and LME declined across the board on Friday morning as investors watched bond yields as well as technology stocks

Shanghai base metals fell across the board in overnight trading. Copper fell 1.79%, aluminium declined 1.4%, zinc shed 0.73%, tin weakened 0.9%, lead slid 1.93% and nickel dropped 8.21%.

The LME complex fell across the board on Thursday. Nickel plunged 8.77% to lead the losses, zinc fell 2.58%, aluminium weakened 3.18%, copper decreased 5.36%, lead went down 2.49% and tin dropped 2.76%.

Copper: Three-month LME copper fell 5.8% to end at $8,589/mt on Thursday, and is likely to trade between $8,710-8,790/mt today.

The most-active SHFE 2104 copper contract went down 0.84% to close at 65,900 yuan/mt in overnight trading, and it is expected to move between 65,600-66,200 yuan/mt today, while spot prices will be seen at discounts 90 yuan/mt - premiums 140 yuan/mt.

After Federal Reserve Chairman Powell's speech at night, the market panic intensified, the US bond yield rose to a one-year high, the US stock market expanded its decline, and the US stock market hit a five-week low. Inflation expectations reached an intraday high, while the US dollar continued to strengthen, hitting 91.67 in intraday trading, reaching a new high of more than three months. Copper contracts continued to be weak and fell sharply at night. In terms of data, the number of US initial jobless claims last week exceeded expectations, and the recovery rate of the job market showed signs of slowing down. The nonfarm employment data to be released on Friday will be monitored. In terms of spot prices, copper prices are currently in a period of fluctuation, and trading market conditions among traders have become the mainstream guide of market prices.

Zinc: Three-month LME zinc fell 2.37% to close at $2,715/mt on Thursday. Zinc stocks at LME-listed warehouses fell 100 mt to 269,100 mt. After the failure of the rebound of LME zinc the day before yesterday and the further increase in the yield of the 10-year US debt yesterday, the pessimistic atmosphere in the market intensified, with short positions actively adding positions and long positions making up positions at low, thus maintaining a weak and fluctuating market recently. The review progress of US economic stimulus bill will be monitored in the near term. The contract is likely to trade between $2,690-2,740/mt today.

The most-liquid SHFE 2104 zinc contract fell 0.73% to end at 21,075 yuan/mt in overnight trading. Yesterday, the downstream enterprises concentrated on restocking and purchasing at low prices, and the spot market transactions picked up. It is expected that the domestic zinc ingot inventory will pass the high point in the near future. At the same time, the shortage of zinc ore in China intensified, and there was still room for downward adjustment of TCs for zinc ore. The recovery of downstream demand and downward adjustment of TCs for zinc ore will strongly support the contract. The SHFE zinc contract is expected to move between 21,000-21,500 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 50-70 yuan/mt.

Lead: Three-month LME lead settled 2.08% lower at $2,000/mt on Thursday. In the near term, the sharp rise in US bond yields affected all risky assets including metals, and the US dollar index rose overnight. The support from $2,000/mt will be monitored today.

The most-active SHFE 2104 lead contract went down 1.93% to close at 14,985 yuan/mt on Thursday night. On the fundamentals, the restocking demand of some battery factories has not yet been released, and the stocks are still likely to pile up this week. The support from 15,000 yuan/mt will be monitored today.

Tin: Three-month LME tin closed down 1.43% at $23,435/mt on Thursday. The US dollar followed the rise of US bond yields, as the upcoming fiscal stimulus measures in the US intensified the expectation of rising inflation, and vaccination enhanced people's optimism about economic recovery. Recently, the continued rise of the US dollar and the profit-taking demand after the continuous rise of LME tin dragged down the contract. Pressure above will be seen from $25,500 /mt today. Support below will be seen from $23,000/mt today.

The most-liquid SHFE 2104 tin contract fell 0.9% at 174,290 yuan/mt on Thursday night. The guidance of LME tin on the trend of SHFE tin should be monitored in the near term. Pressure above will be seen from 180,000 yuan/mt today. Support below will be seen from 170,000 yuan/mt today.

Market commentary
Copper
Aluminium
Zinc
Nickel
Lead
Tin

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