SMM Morning Comments (Mar 19): Shanghai base metals were mostly lower as investors turned cautious

Published: Mar 19, 2021 10:00

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Nonferrous metals on both SHFE and LME mostly cruised lower on Friday morning as investor sentiment turned cautious on the back of fresh worries around inflation expectations.

SHANGHAI, Mar 19 (SMM) — Nonferrous metals on both SHFE and LME mostly cruised lower on Friday morning as investor sentiment turned cautious on the back of fresh worries around inflation expectations.

Shanghai base metals ended mostly lower in overnight trading. Copper edged down 0.12%, zinc weakened 1.22%, nickel shed 0.46%, lead fell 0.14% and aluminium lost 1.13%, while tin added 0.74%.

The LME complex performed similarly on Thursday. Zinc plunged 1.8% to lead the losses, nickel fell 0.35%, copper weakened 0.74% and aluminium slid 0.56%, while tin gained 0.91% and lead rose 0.34%.

Copper: Three-month LME copper fell 1.45% to end at $8,998/mt on Thursday, and is likely to trade between $8,950-9,030/mt today.

The most-active SHFE 2105 copper contract went up 0.18% to close at 67,040 yuan/mt in overnight trading, and it is expected to move between 66,600-67,200 yuan/mt today, while spot discounts will be seen at 120-20 yuan/mt.

It was announced at night that the number of initial jobless claims in the US rose unexpectedly to 770,000 last week, reaching the highest level in a month. Investors were worried about the sustained recovery of the job market. In addition, worries about the pandemic resurfaced, and some large European economies re-implemented the blockade, which aggravated the uncertainty of demand prospects. Oil prices fell for five consecutive days at night with the biggest drop in six months. All three major stock indexes in the US closed down, and negative sentiment affected the weakening of commodities, dragging down copper prices. On the spot side, the target willingness of trade buying was still at a large discount level, while the cargo holders were still reluctant to sell and unwilling to cut prices in the near term.

Aluminium: Three-month LME aluminium fell 0.76% to close at $2,115/mt on Thursday, with stocks falling to 1,897,300 lots. It is expected to trade between $2,190-2,220/mt today. Affected by factors such as the slowdown of vaccination in Europe and the strengthening of the US dollar, US initial jobless claims unexpectedly increased last week, and LME aluminium traded weakly under pressure.

The most-liquid SHFE 2105 aluminium contract fell 1.13% to settle at 17,490 yuan/mt on Wednesday night, and is likely to trade between 17,300-17,600 yuan/mt today. The uncertainty of China-US relations still existed with the strong fear of end-user consumption for high prices, social inventories of aluminium ingots posted slower increase.

Zinc: Three-month LME zinc fell 2.25% to close at $2,776/mt on Thursday. Zinc stocks at LME-listed warehouses fell 175 mt to 265,825 mt. Affected by factors such as the slowdown of vaccination in Europe and the strengthening of the US dollar, US initial jobless claims unexpectedly increased last week, and LME zinc was under pressure and traded weakly. 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 2105 zinc contract fell 1.23% to end at 21,350 yuan/mt in overnight trading. The uncertainty of China-US relations still existed with the fact that the end-user consumption did not fully recover, and the high prices of zinc ingot and steel inhibited the order increment of downstream galvanised enterprises. The social inventory after zinc prices dropped will be monitored in the short 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 40-50 yuan/mt.

Nickel: The most-active SHFE 2106 nickel contract fell 0.46% to close at 120,200 yuan/mt on Thursday. Open interests rose 5,070 lots to 146,000 lots.

Lead: Three-month LME lead settled 0.57% higher at $1,962/mt on Thursday. Whether the contract could maintain the upward trend and stand firm above $1,930/mt will be monitored today.

The most-active SHFE 2104 lead contract went down 0.14% to close at 14,760 yuan/mt on Thursday night. Whether the contract could move above 14,800 yuan/mt will be monitored today.

Tin: Three-month LME tin closed up 0.87% at $25,975/mt on Thursday. The US dollar index rose 0.46% to 91.82, and fell to a two-week low of 91.30 earlier in the session. The 10-year US bond yield regained its recent rise and hit a 13-month high of 1.754%. Yields rose faster than the bonds of the same period in the euro zone and Britain, supporting the US dollar. Concerns from the supply side continued to support the trend of LME tin. Pressure above will be seen from $27,000 /mt today. Support below will be seen from $25,000/mt today.

The most-liquid SHFE 2105 tin contract rose 0.74% to end at 177,780 yuan/mt on Thursday night. LME tin gave some guidance on the trend of SHFE tin, while the trend of SHFE tin was affected by the pressure of spot inventories, and it is expected that the contract will keep fluctuating 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

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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