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SMM Morning Comments (Jun 7): LME base metals basically rose amid lower-than-expected increase in US nonfarm payrolls
Jun 7, 2021 09:47CST
Source:SMM
LME base metals basically rose last Friday night as the increase in US nonfarm payroll fell short of expectations, and SHFE metals mostly went up.

SHANGHAI, Jun 7 (SMM) – LME base metals basically rose last Friday night as the increase in US nonfarm payroll fell short of expectations, and SHFE metals mostly went up.

In the SHFE market, copper increased 1.33%, aluminium inched up 0.82%, lead dropped 0.83%, zinc edged up 0.49%, tin gained 0.27%, and nickel won 0.54%.

LME metals went up. Copper rose 1.44%, aluminium won 2.08%, lead fell 1.23%, zinc gained 0.64%, and tin increased 1.99%.

Copper: Three-month LME copper rose 1.44% to close at $9,960/mt in Friday’s overnight trading, and is expected to trade between $9,960-10,040/mt today.

The most active SHFE 2107 copper contract increased 1.33% to settle at 71,850 yuan/mt last Friday night, and is expected to move between 71,700-72,200 yuan/mt today.

US nonfarm payrolls increased by a solid 559,000 jobs last month, but that was below the consensus forecast for 670,000 jobs added in May, which alleviated the concerns of Fed’s tightening of monetary policy. Three major indexes of US stocks kept rising, and US dollar fell sharply. Copper spot premiums will rise steadily amid wider price spread between SHFE front-month and next-month contracts within only one week before the settlement day. Spots are expected to trade between premiums of 40-130 yuan/mt.

Aluminium: Three-month LME aluminium went up 2.08% to settle at $2,455/mt last Friday night, with open interest up 7,236 lots to 720,000 lots, and is expected to trade between $2,400-2,470/mt today.

The most active SHFE 2107 aluminium contract inched up 0.82% to close at 18,450 yuan/m in the overnight trading of last Friday, with open interest increasing 951 lots to 20,332 lots. The fundamental consumption is in peak season, and the aluminium production was reduced in some regions due to the power curtailment, so the aluminium stocks kept falling. SHFE aluminium is expected to rebound and trade between 18,300-18,600 yuan/mt today, and spots are likely to be offered at narrow premiums over June contract.

Lead: Three-month LME lead fell 1.23% to close at $2,136/mt last Friday night despite the falling US dollar, and is likely to move over the support line a $2,100/mt.

The most liquid SHFE 2107 lead contract dropped 0.83% to settle at 14,970 yuan/mt in the overnight trading of last Friday, amid the lower LME lead and increasing social inventories. The bears kept increasing open interest for 5 consecutive trading days, which dragged down the contract. Attention will be paid to whether SHFE lead can stop falling and rebound over 15,000 yuan/mt today.

Zinc: Three-month LME zinc gained 0.64% in Friday’s overnight trading and closed at $3,004/mt, and is expected to trade between $2,980-3,030/mt today. LME stocks dropped 2,575 mt or 0.93% to 274,550 mt last Friday. The increase in US nonfarm jobs fell short of expectation, which eased the concerns of Fed’s tightening of monetary policy.

The most traded SHFE 2107 zinc contract edged up 0.49% to settle at 22,560 yuan/mt last Friday night. Zinc prices are likely to remain volatile at high levels amid weaker supply and demand in the off-peak season of consumption. July contract is expected to trade between 22,300-22,800 yuan/mt, and spot premiums for domestic 0# Shuangyan will be seen at 90-100 yuan/mt.

Tin: Three-month LME tin closed 1.99% higher at $30,800/mt in Friday’s overnight trading, with open interest increasing 558 lots to 12,290 lots, amid lower-than-expected nonfarm job increase. LME tin stocks increased 205 mt to 1,580 mt. LME tin is likely to be affected by US dollar trends, and is likely to trade between $30,000-31,000/mt today.

The most liquid SHFE 2107 tin contract gained 0.27% to close at 204,600 yuan/mt last Friday night, with open interest losing 1,901 lots to 27,719 lots, and is likely to trade between 200,000-210,000 yuan/mt today with the support of tight spot supply.

Nickel: The most traded SHFE nickel contract won 0.54% to close at 131,710 yuan/mt last Friday night, with open interest losing 5,765 lots to 122,000 lots. LME nickel opened at $18,040/mt today and trended lower to around $18,000/mt.

Nickel fundamentals stood positive for a long period amid the high production of new energy and stainless steel industry, and the prices of nickel sulphate and high-grade NPI stood high after nickel prices fell back under pressure, as the US dollar trend was unclear. Fed maintained the loose policies and let inflations expand. The market did not give positive reaction to the strong US economic data. In the short term, FED may not cut short the debt purchase, and nickel prices are likely to rise after US dollar rebounds. SHFE nickel is likely to trade between 129,000-134,500 yuan/mt, and LME nickel between $17,600-18,200/mt this week.

Market commentary
Copper
Aluminium
Lead
Zinc
Tin
Nickel

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