SMM Morning Comments (May 10): Shanghai base metals were mostly higher after US jobs report missed expectations

SHANGHAI, May 10 (SMM) — Nonferrous metals on the SHFE were mostly higher following “a big miss” in the US jobs report released Friday. Meanwhile, their counterparts on the LME also rose for the most part.

Shanghai base metals mostly advanced in overnight trading. Copper increased 2.12%, aluminium rose 0.76%, nickel went up 0.28% and zinc strengthened 2.64%, while lead remained unchanged and tin weakened 1.68%.

The LME complex performed similarly on Friday. Copper added 2.94%, aluminium rose 0.9%, lead increased 0.38%, zinc went up 2.68% and nickel strengthened 0.92%, while tin fell 0.99%.

Copper: Three-month LME copper rose 2.94% to end at $10,412.5/mt on last Friday, and is likely to trade between $10,490-10,570/mt today.

The most-active SHFE 2106 copper contract went up 1.09% to close at 75,720 yuan/mt in overnight trading, and it is expected to move between 76,000-76,600 yuan/mt today, while spot premiums will be seen at 130-60 yuan/mt.

US Nonfarm payrolls increased by only 266,000 jobs, far lower than the expected 1 million. Yellen said that the weak nonfarm data highlights that the road to economic recovery is still long, which strengthens the sustainability of economic stimulus and alleviates the market's worries about inflation. All three major US stock indexes closed up at night, while the US dollar index fell to a low of more than two months, and copper futures continued to show strong performance. With only six trading days left before delivery, the spot market premium is expected to stop falling and rebound this week.

Aluminium: Three-month LME aluminium rose 0.88% to close at $2,532/mt on Friday. It is expected to fluctuate between $2,520-2,580/mt today.

The most-liquid SHFE 2106 aluminium contract rose 0.76% to settle at 19,845 yuan/mt on Friday night, and is likely to fluctuate move above 19,500 yuan/mt today.

Zinc: Three-month LME zinc rose 2.68% to close at $3,025.5/mt on last Friday. Zinc stocks at LME-listed warehouses fell 225 mt to 290,800 mt. The market believes that the loose monetary policy of the United States will continue, boosting bullish sentiment. Considering the macro warmer sentment, it is expected that LME zinc will fluctuate strongly. The contract is likely to trade between $2,930-3,030/mt today.

The most-liquid SHFE 2106 zinc contract rose 2.64% to end at 22,770 yuan/mt in overnight trading. The SHFE zinc contract is expected to move between 22,300-22,800 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 50-70 yuan/mt.

Nickel: The most-active SHFE 2106 nickel contract rose 0.28% to close at 133,600 yuan/mt on last Friday. Open interests fell 1,963 lots to 126,000 lots. SHFE nickel is expected to trade between 130,000-141,000 yuan/mt this week. LME nickel is expected to trade between $17,800-18,800/mt this week.

Tin: Three-month LME tin closed down 0.99% at $29,870/mt on last Friday. Indonesia Tianma Company announced last Friday that refined tin output in the first quarter decreased by 63.1% year on year, while since then, the Indonesian Ministry of Trade announced that Indonesia exported 7,007.29 mt of refined tin in April, up 66% year on year and 16% month on month. The US dollar fell again to support the trend of LME tin, while the rise of LME tin was also dragged down by the weak domestic trend. The contract is expected to fluctuate at high in the near term. Pressure above will be seen from $31,000/mt today. Support below will be seen from $28,500/mt today.

The most-liquid SHFE 2107 tin contract fell 1.69% at 194,810 yuan/mt on Friday night. According to the SMM survey, domestic refined tin output increased 7.41% month on month and rose 44.5% year on year in April, and environmental protection supervision did not have a great impact on refined tin production. Social inventories of domestic tin ingots also increased compared with that before the Labor Day holiday. In addition, high tin prices suppressed the downstream consumption, and the contract is expected to fluctuate weakly in the near term. Pressure above will be seen from 200,000 yuan/mt today. Support below will be seen from 191,000 yuan/mt today.