SMM Morning Comments (Jun 25): Shanghai base metals mainly increased after agreement was reached on Biden’s infrastructure plan.

SHANGHAI, Jun 25 (SMM) — Shanghai base metals basically went up in the overnight trading after an agreement was reached between democratic and republican parties on Biden’s 579 billion infrastructure plan. LME base metals mostly increased as well.

In LME market, copper dropped 0.31%, aluminium closed 0.25% higher, lead rose 1.28%, zinc added 0.66%, and tin gained 1.07%.

In SHFE market, copper dipped 0.12%, aluminium edged up 0.11%, lead increased 0.78%, zinc went up 0.57%, tin won 0.79%, and nickel gained 2.44%.

Copper: Three-month LME copper dropped 0.31% to close at $9,458/mt on Thursday night, and is expected to trade between $9,420-9,500/mt today.

The most active SHFE 2108 copper contract dipped 0.12% to close at 68,940 yuan/mt last night night, and is expected to trade between 68,500-69,100 yuan/mt today, with spots offered between a discount at 60 yuan/mt and a premium at 20 yuan/mt.

Biden and a group of senators from both democratic and republican parties reached a preliminary agreement on the 579 billion budget for infrastructure construction, which boosted the investors’ positive expectations of economic recovery, and US stocks rose to a record high. However, inflation data stood high, and US dollar was flat under pressure. In addition, the market willingness to deliver was high amid the deeper contango structure, and the overseas consumption weakened. Copper prices will be mainly affected by US dollar trends, and US dollar is likely to rise further with the expectation of shrinking Fed policies. If copper futures remain fluctuating at high levels, and downstream consumption stands low, the market support for the demand of June invoices may be short. It may be hard for premiums to keep recovering.

Aluminium: Three-month LME aluminium closed 0.25% higher at $2,440/mt on Thursday night, with open interest down 9,400 lots to 685,000 lots, and is expected to trade between $2,400-2,460/mt today.

The most traded SHFE 2108 aluminium contract edged up 0.11% to close at 18,765 yuan/mt on Thursday night, with open interest up 4,511 lots to 211,700 lots, and is expected to trade between 18,600-19,000 yuan/mt today.

Lead: Three-month LME lead rose 1.28% to end at $2,218/mt on Thursday night. US dollar fluctuated sideways, and LME lead stocks kept falling, driving lead prices to break through the high level in the previous week. Whether LME lead could maintain the bullish market and test $2,230/mt will be the focus today.

The most liquid SHFE 2108 lead contract increased 0.78% in the overnight trading to end at 15,585 yuan/mt yesterday. Bulls further added positions, and SHFE lead nearly reversed all losses in the day trading. SHFE lead mainly traded between 15,100-15,600 yuan/mt recently, and the line at 15,500 yuan/mt will be the focus today.

Zinc: Three-month LME zinc added 0.66% to settle at $2,915/mt in the overnight trading, with open interest down 1,668 lots to 256,000 lots. LME zinc stocks decreased 600 mt or 0.23% to 258,000 mt last night. Biden stated that the two parties agreed on the infrastructure plan, and the US initial unemployment claims declined this week, which boosted the market sentiment. LME zinc is expected to trade between $2,880-2,930/mt today.

The most active SHFE 2108 zinc contract went up 0.57% to close at 21,965 yuan/mt on Thursday night, with open interest up 6,238 lots to 91,000 lots. The upward LME prices pulled up SHFE zinc, but the oversupply in domestic market limited the price rebound. The August contract is expected to trade between 21,500-22,000 yuan/mt today, with the premiums of domestic 0# Shuangyan zinc likely to be seen between 150-160 yuan/mt over July contract.

Tin: Three-month LME tin gained 1.07% to close at $30,750/mt last night, with open interest up 99 lots to 12,045 lots. Overseas tight supply still supported tin prices. LME tin is expected to trade between $30,000-31,000/mt today.

The most traded SHFE 2108 tin contract won 0.79% to end at 209,990 yuan/mt last night, with open interest up 499 lots to 41,516 lots. Yunnan Tin Group announced to halt the production of its branches and optimise the tin smelting system, which intensified the market concerns of tin supply. The impact of smelters’ shipments on tin prices is worth attention. SHFE tin is expected to trade between 206,000-212,000 yuan/mt today.

Nickel: Three-month LME nickel increased 2.02% to close at $18,445/mt on Thursday, and is expected to trade around $18,500/mt today.

The most liquid SHFE 2107 nickel contract gained 2.44% to settle at 137,890 yuan/mt last night, driven by Russian Economy Minister Reshetnikov’s proposal to impose tariffs on copper and nickel starting from August 1. Although the proposal was not settled, the market sentiment was affected significantly. Nickel prices may fall slightly after the news is digested. SHFE nickel is expected to fluctuate above 136,000 yuan/mt.