SMM Morning Comments (Jun 9): Base metals basically rose amid stronger expectation of economic recovery

SHANGHAI, Jun 9 (SMM) – LME base metals basically closed higher yesterday amid sharp increase of job vacancies and stronger expectation of economic recovery, and SHFE metals all went up.

In LME market, copper went up 0.65%, aluminium inched up 1.2% lead rose 0.76%, zinc dipped 0.1%, tin won 1.96%, and nickel closed flat.

In SHFE market, copper edged up 1.19%, aluminium contract settled 0.46% higher, lead gained 1.2%, zinc increased 0.38%, tin rose 2.04%, and nickel won 1.51%.

Copper: Three-month LME copper went up 0.65% to end at $10,015/mt in the overnight trading, and is likely to trade between $9,960-10,050/mt today.

The most-traded SHFE 07 copper contract edged up 1.19% to close at 72,270 yuan/mt in overnight trading.

Shanghai copper cathode spots were quoted at premiums of 70-130 yuan/mt over June contract yesterday, and the average price premium was 100 yuan/mt, down 5 yuan/mt from the previous day.

Yesterday's trading fluctuated within a narrow range, and the price spread between front-month and next-month contracts shrank, suppressing the arbitrage room. Spot premiums had no advantage over futures delivery and long-term orders, and trade was quiet. Downstream users stood at sideline, and holders maintained spot quotations at high premiums amid falling stocks. The market stalemate may continue if the overall environment is unchanged within the week.

Job Vacancies and Labor Turnover Survey (JOLTS) released by the US Department of Labor last night showed that the number of job vacancies increased to 9.3 million in April, the highest level since 2000. The sharp increase in job vacancies indicates that the pandemic prevention and restrictions will be lifted, economy will strengthen, and the job market is expected to further recover. In addition, with wider vaccination and the rapid economic recovery, the market's confidence in the prospects of oil demand continues to increase, and WTI crude oil rose sharply last night, which is positive for copper.

Aluminium: Three-month aluminium inched up 1.2% to close at $2,449.5/mt yesterday, with open interest losing 2,670 lots to 721,000 lots, and is expected to trade between $2,400-2,500/mt today as US dollar rebounded slightly.

The most liquid SHFE 2107 aluminium contract settled 0.46% higher at 18,460 yuan/mt in the overnight trading, with open interest decreasing 2,710 lots to 190,000 lots. SHFE lead is expected to trade between 18,300-18,650 yuan/mt if its free from the impact of domestic policy control, and spot ingots are likely to trade at premiums between 0-20 yuan/mt in east China.

Lead: Three-month LME lead rose 0.76% to close at $2,180.5/mt in the overnight trading, amid the US dollar fluctuation at low levels and further decrease in LME lead stocks. Bears continued to lighten positions to avoid risks. Today's focus is whether LME lead can remain upward and test $2,200/mt.

The most liquid SHFE 2107 lead contract gained 1.2% to close at 15,190 yuan/mt last night. SHFE lead stopped falling and rose slightly on the support line of 15,000 yuan/mt. Attention needs to be paid to whether bulls will continue to drive the prices up to the 10-day moving average.

Zinc: Three-month LME zinc dipped 0.1% to close at $3,017.5/mt in the overnight trading, with open interest losing 1,728 lots to 263,000 lots, and is expected to trade between $2,980-3,030/mt today. LME zinc stocks dropped 1,750 mt or 0.64% to 270,350 mt. US dollar went up overnight, US infrastructure act was impeded, and the market was worried that Fed might tighten the monetary policy, which all weighed on LEM zinc.  

The most traded SHFE 2107 zinc contract increased 0.38% last night to settle at 22,670 yuan/mt, with open interest increasing 1,015 lots to 92,977 lots. Fundamentals remained largely unchanged as the market expectations of inflation ebbed and sat at sideline. Consumption continued to weaken. July contract is expected to move between 22,300-22,800 yuan/mt today, and spot premiums for domestic 0# Shuangyan are likely to be seen between 90-100 yuan/mt over July contract.

Tin: Three-month LME tin won 1.96% to close at $31,235/mt last night, with open interest decreasing 156 lots to 11,913 lots. Overseas short supply supported LME tin prices, which are expected to trade between $30,000-31,500/mt in the short term, and attention will be paid to the line at $31,000/mt.

The most-liquid SHFE 2107 tin contract rose 2.04% to settle at 208,530 yuan/mt in overnight trading, with open interest increasing 3,024 lots to 30,157 lots. Rainy season appeared in Yunnan recently, but the power curtailment is not completely lifted, and the short supply supports the tin prices. SHFE tin is expected to trade between 200,000-210,000 yuan/mt.

Nickel: Three-month LME nickel closed at $17,985/mt yesterday, flat from the previous day, with open interest losing 485 lots to 219,000 lots.

The most traded SHFE 2107 nickel contract won 1.51% to end at 132,550 yuan/mt in the overnight trading, with open interest up 8,729 lots to 120,000 lots.

Nickel futures are expected to be mainly affected by the macro sentiments with the fundamental support and fluctuate in a wide range this week.