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SMM Morning Comments (Jun 11): Base metals ended mixed last night amid increasing inflation concerns
Jun 11,2021 09:49CST
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Source:SMM
Base metals in LME and SHFE market, closed mixed as the market concerns of inflation increased due to the record high of US core CPI for May.

SHANGHAI, Jun 11 (SMM) – Base metals in LME and SHFE market, closed mixed as the market concerns of inflation increased due to the record high of US core CPI for May.

As of SHFE metals, copper lost 0.41%, aluminium won 2.17%, lead dipped 0.23%, zinc fell 0.33%, tin edged up 1.5%, and nickel rose 1.39%.

In LME market, copper dropped 0.77%, aluminium won 1.08% higher, lead lost 0.34%, zinc increased 0.38%, tin rose 0.1%, and nickel gained 0.33%.

Copper: Three-month LME copper dropped 0.77% to end at $9,894/mt in the overnight trading, and is expected to trade between $9,850-9,930 yuan/mt today.

The most active SHFE 2107 copper contract lost 0.41% to close at 71,000 yuan/mt last night, and is likely to trade between 70,800-71,400 yuan/mt today.

From the macro perspective, US announced the core CPI for May increasing 3.8% on the year and reaching a record high since 1992. US initial jobless claims last week and the continued jobless claims in the week ended May 25 both declined, showing the improvement of the labour market, which was in accordance with the strong economic data. The market concerns of inflation increased. However, the US 10-year Treasury yields fell to the early March level. Investors expect Fed to maintain the loose monetary policy with a cautious stance. The market will focus on the Fed Interest Rate Decision next week.

The settlement day for 2106 contracts is only two days away, and the purchase and selling prices have been unbalanced, which prompted some market participants to make spot quotations over 2107 contracts. Spot quotations may be started at a discount of 100 yuan/mt, which may improve the transaction. Spot premiums are expected to be seen between 60-120 yuan/mt today.

Aluminium: Three-month LME aluminium closed 1.08% higher at $2,478/mt in the overnight trading, with open interest down 4,367 lots to 713,000 lots, and is expected to trade between $2,440-2,500/mt today.

The most traded SHFE 2107 aluminium contract won 2.17% last night to end at 18,840 yuan/mt, with open interest up 6,069 lots to 192,509 lots. The undersell news was not proved, and bulls entered the market in a tentative attempt last night. The July contract is expected to trade between 18,500-19,000 yuan/mt today, with the premiums of aluminium ingot stable between 0-20 yuan/mt in east China.

Lead: Three-month LME lead lost 0.34% to settle at $2,185/mt in the overnight trading as the US dollar index fell after increase. Today’s focus will be the support from the 5-day and 10-day moving averages.

The most liquid SHFE 2107 lead contract dipped 0.23% to close at 15,395 yuan/mt last night under the pressure line of 15,500 yuan/mt. Today’s focus will be the support line at 15,350 yuan/mt and the 20-day and 40-day moving averages.

Zinc: Three-month LME zinc increased 0.38% to close at $3,001/mt in the overnight trading, with open interest up 2,051 lots to 264,000 lots. LME zinc stocks decreased by 1,000 mt or 0.37% to 268,650 mt last night. US CPI for May reached a record high in 13 years, and inflation continued to expand amid the strong economic recovery, which boosted the bearish sentiment. However, European Central Bank maintained the three key interest ratios unchanged, which limited the decrease in zinc futures. LME zinc is expected to trade between $2,970-3,020/mt today.

The most traded SHFE 2107 zinc contract fell 0.33% to close at 22,395 yuan/mt, with open interest losing 2,286 lots to 86,396 lots. Fundamentals remained week, and supply gradually increased. Meanwhile, operating rates of galvanising and die-casting plants dropped in the off-peak season. The market undersell weighed on zinc prices. The 2107 zinc contract is expected to trade between 22,000-22,500 yuan/mt today, and the premiums of 0# Shuangyan zinc spot is expected to be seen between 90-100 yuan/mt over the July contract.

Tin: Three-month LME tin rose 0.1% to close at $31,300/mt in the overnight trading, with open interest losing 14 lots to 12,063 lots, amid low US dollar index and tight overseas supply. The MSC smelter in Malaysia was suspended due to the COVID-19 pandemic, which continued to drive up tin prices. LME tin is expected to trade between $30,000-31,000/mt.

The most active SHFE 2107 tin contract edged up 1.5% to settle at 210,250 yuan/mt last night, with open interest increasing 664 lots to 29,044 lots. The growing demand of export tightened China’s supply of tin spot, supporting the tin futures. SHFE tin is expected to trade above the support line at 206,500 yuan/mt and test the line at 210,000 yuan/mt in the short term.

Nickel: Three-month LME nickel gained 0.33% to close at $18,200 in the day trading on Thursday, with open interest decreasing 692 lots to 217,000 lots. Today’s focus will be the wide volatility caused by the funds leaving the market to avoid risks on the last trading day in the week.

The most liquid 2107 nickel contract rose 1.39% to settle at 134,020 yuan/mt in the overnight trading, with open interest increasing 9,509 lots to 124,000 lots. Today’s focus will be the pressure line at 135,000 yuan/mt.

Market commentary
Copper
Aluminium
Lead
Zinc
Tin
Nickel

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