SMM Morning Comments (Mar 12): Shanghai base metals were mostly higher following US stocks climbing to record highs overnight

Published: Mar 12, 2021 10:00
Shanghai base metals were mostly higher on Thursday morning. Meanwhile, their counterparts on the LME rose across the board as ECB vows to ramp up bond buying.

SHANGHAI, Mar 12 (SMM) — Shanghai base metals were mostly higher on Thursday morning. Meanwhile, their counterparts on the LME rose across the board as ECB vows to ramp up bond buying.

Shanghai base metals mostly advanced in overnight trading. Copper added 1.08%, tin rose 0.9%, aluminium went up 0.66% and zinc increased 1.14%, while lead slid 1.36% and nickel fell 0.1%.

The LME complex all closed higher on Thursday. Copper rose 2.6%, aluminium increased 0.92%, zinc went up 2.7%, lead added 0.93%, nickel climbed 1.21% and tin gained 3.2%.

Copper: Three-month LME copper rose 2.6% to end at $9,125/mt on Thursday, and is likely to trade between $9,090-9,180/mt today.

The most-active SHFE 2104 copper contract went down 0.34% to close at 67,010 yuan/mt in overnight trading, and it is expected to move between 66,800-67,400 yuan/mt today, while spot prices will be seen at discounts 30 yuan/mt - premiums 80 yuan/mt.

The number of US Initial Jobless Claims last week, which was announced at night, stood at 712,000, the lowest level since November, indicating the recovery momentum of the labor market. Biden signed the $1.9 trillion bail-out bill, which boosted market risk appetite and the US stock market hit a record high. The US dollar index continued its decline to a one-week low, and LME copper rose significantly at night.

Aluminium: Three-month LME aluminium rose 0.92% to close at $2,185/mt on Thursday, with open interest rising to 716,000 lots. It is expected to trade between $2,100-2,200/mt today.

The most-liquid SHFE 2104 aluminium contract rose 0.66% to settle at 17,470 yuan/mt on Wednesday night, and is likely to trade between 17,250-17,650 yuan/mt today.

Zinc: Three-month LME zinc rose 2.7% to close at $2,832/mt on Thursday. Zinc stocks at LME-listed warehouses fell 225 mt to 267,675 mt. The weakness of the US dollar provided basic support for nonferrous Metals, and the European Central Bank kept its quantitative easing policy unchanged, promising to accelerate the pace of asset purchase. Biden signed the stimulus bill, and US Initial Jobless Claims dropped sharply, boosting the market optimism. Macro guidelines will be monitored in the near term. The contract is likely to trade between $2,780-2,830/mt today.

The most-liquid SHFE 2104 zinc contract rose 1.14% to end at 21,685 yuan/mt in overnight trading. Zinc ore tension pattern has not obviously improved, and the supply side still has support for zinc prices. After the release of peak seasons, zinc prices will have further upward momentum. The recovery of production after environmental protection and limited production in northern galvanised enterprises will be monitored in the near term. The SHFE zinc contract is expected to move between 21,300-21,800 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 50-60 yuan/mt.

Nickel: The most-active SHFE 2106 nickel contract fell 0.1% to close at 121,750 yuan/mt on Thursday. Open interests rose 5,750 lots to 113,000 lots. The adjustment and repair of SHFE nickel at a low level will be monitored today.

Lead: Three-month LME lead settled 0.93% higher at $1,962/mt on Thursday. The huge scale of overseas macro-level economic stimulus plans and US moderate inflation and employment data still gave the market bullish confidence. Whether the contract could stand firm above $1,950/mt will be monitored today.

The most-active SHFE 2104 lead contract went down 0.58% to close at 14,680 yuan/mt on Thursday night. Recently, the downstream consumption of lead is stable, and electric vehicles and automobile batteries are gradually entering the traditional off-season of sales. The raw material stocks are expected to be low with restocking for rigid demand, unlikely to give the contract a strong rebound momentum. The cost support of secondary lead and whether the callback trend of base metals could boost the contract to stop falling and stand firm above 14,600 yuan/mt will be monitored today.

Tin: Three-month LME tin closed up 3.2% at $25,940/mt on Thursday. The landing of the US economic stimulus plan prompted the US dollar to fall again, which helped the rise of LME tin. In addition, the spot supply of overseas tin ingots is still tight, and the contract is expected to maintain a strong trend in the near term. Pressure above will be seen from $27,000 /mt today. Support below will be seen from $24,000/mt today.

The most-liquid SHFE 2105 tin contract fell 0.63% at 178,920 yuan/mt on Thursday night. Although the supply of tin ore was still tight, tin ingots stocks piled up and consumption slowed down after the CNY, which led to the increase of inventory pressure and dragged down the trend of tin prices. Pressure above will be seen from 180,000 yuan/mt today. Support below will be seen from 170,000 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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