SMM Morning Comments (Apr 8): Shanghai base metals fell broadly as the Fed signals easy policy will stay for now

SHANGHAI, Apr 8 (SMM) — Shanghai base metals fell for the most part on Thursday morning, while their counterparts on the LME also saw broad losses. 

Shanghai base metals were mostly lower in overnight trading. Copper dropped 0.97%, aluminium shed 0.11%, zinc edged down 0.07% and tin slid 1.5%, while lead gained 0.37%.

The LME complex, except for zinc and lead, closed lower on Wednesday. Copper fell 1.22%, aluminium edged down 0.02%, nickel shed 0.6% and tin slipped 0.19%, while zinc inched up 0.02% and lead firmed 0.71%. 

Copper: Three-month LME copper fell 1.22% to close at $8,930/mt on Wednesday, while the most-traded SHFE 2105 copper contract ended 0.97% lower at 66,450 yuan/mt in overnight trading. Even as the US economy gathered steam this year, Federal Reserve officials remained cautious about the continuing risks of the pandemic and committed to pouring on monetary policy support until a rebound was more secure. LME copper is expected to trade between $8,900-8,980/mt today, and SHFE copper between 66,200-66,700 yuan/mt, while spot copper will be traded between discounts of 20 yuan/mt and premiums of 50 yuan/mt.

Aluminium: Three-month LME aluminium edged down 0.02% to close at $2,259.5/mt on Wednesday, and is expected to fluctuate between $2,230-2,280/mt today.

The most-active SHFE 2105 aluminium contract ended at 17,460 yuan/mt in overnight trading, with open interest decreasing 3,297 lots to 194,000 lots, and is likely to move between 17,400-17,600 yuan/mt today.

Zinc: Three-month LME zinc inched up 0.02% to settle at $2,830.5/mt on Wednesday, with open interest adding 209 lots to 243,000 lots. Zinc stocks across LME-listed warehouses shrank by 1,000 mt or 0.37% to 267,250 mt.  LME zinc is likely to move between $2,810-2,860/mt today.

The most-traded SHFE 2105 zinc contract edged down 0.07% to close at 21,840 yuan/mt in overnight trading, with open interest rising 1,841 lots to 78,265 lots. Recovery of domestic refined zinc supply missed expectations in March due to energy consumption control in Inner Mongolia, and this, combined with still tight zinc concentrate supply, supported zinc prices. The May contract is likely to move between 21,500-22,000 yuan/mt today, while spot discounts for domestic 0# Shuangyan will be seen at 10-20 yuan/mt against the contract.

Nickel: Three-month LME nickel shed 0.6% to end at $16,685/mt on Wednesday. The most-active SHFE 2106 nickel contract settled at 125,420 yuan/mt in overnight trading, with open interest losing 1,046 lots to 159,000 lots.  It is expected to move between 120,000~128,000 yuan/mt today, while LME nickel to fluctuate between $16,000-16,900/mt.

Lead: Three-month LME lead settled 0.71% higher at $1,982/mt on Wednesday, and whether it could steady above the five-day moving average today will be monitored. 

The most-liquid SHFE 2105 lead contract gained 0.37% to close at 14,970 yuan/mt in overnight trading. Environmental restrictions and narrower profits are likely to weigh on secondary lead output, which will be supportive to lead prices. Whether the contract could steady above the 14,900 mark today will be watched.

Tin: Three-month LME tin weakened 0.19% to end at $25,750/mt on Wednesday. According to data released by the Indonesian Ministry of Trade on April 7, Indonesia's exports of refined tin in March jumped 33.1% from the same period last year to 6,043.21 mt. LME tin is expected to move between $25,000-26,000/mt today. 

The most-liquid SHFE 2106 tin contract dropped 1.5% to settle at 182,050 yuan/mt in overnight trading, with open interest losing 251 lots to 34,608 lots. It is likely to trade between 177,000-185,000 yuan/mt today.