SMM Evening Comments (Jun 25): Shanghai nonferrous metals closed mostly higher as investors monitored recovery, tapering fears

SHANGHAI, Jun 25 (SMM) – SHFE nonferrous metals rose for the most part on Friday June 25 as investors monitored the prospect of a steady economic rebound and fears of a tapering of monetary stimulus.

Nickel, the best performer, rose 2.2%, lead advanced 0.94%, aluminium went up 0.99% and tin gained 0.78%, while copper fell 0.46% and zinc decreased 0.37%.

The ferrous complex rose across the board. Iron ore advanced 1.24%, rebar rose 1.81%, and hot-rolled coil climbed 1.75%.

Copper: The most-traded SHFE 2108 copper contract finished the day 0.46% lower at 68,700 yuan/mt. Open interest rose 2,712 lots to 117,400 lots. US President Biden reached a preliminary agreement with a group of Democratic and Republican senators on the $579 billion infrastructure spending plan, saying that it will create millions of jobs and realize a crucial part of Biden's economic agenda. Federal Reserve Kaplan's forecast of inflation rate of 3.4% this year and 2.4% next year has "upward risk". Demand is expected to remain strong. The Bank of England kept the benchmark interest rate unchanged at 0.1% and the total asset purchase scale unchanged at 895 billion pounds, which was in line with market expectations. On the whole, the market sentiment is stable recently, and it is difficult to see large fluctuations. The annual rate of PCE price index in May in the US, and whether the contract could move above the 10-day moving average driven by LME copper will continue to be monitored tonight.

Aluminium: The most-liquid SHFE 2108 aluminium contract finished the day 0.99% lower at 18,930 yuan/mt. Open interest rose 19,733 lots to 227,000 lots. Data such as the number of durable goods and jobless claims in the US performed well in line with expectations, and the fluctuation of the US index was slight. In addition, the impact was gradually digested by the market due to the first batch of metal reserves. The seasonal off-season of fundamental consumption is coming, and the gradual weakening of consumption will suppress the decrease of stocks continuously, and the inflection point will appear in July. The contract is expected to trade bwtween 18,500-19,000 yuan/mt tonight.

Zinc: The most-active SHFE 2108 zinc contract closed down 0.37% at 21,760 yuan/mt. Open interest rose 11,081 lots to 95,802 lots. The final GDP of the US in the first quarter increased by 6.4% month on month in line with expectations. Biden said he reached an infrastructure agreement with senators from both parties. At the same time, although the number of initial jobless claims as of June 19 was higher than expected, it showed a downward trend compared with last week. It indicates that the economy is still in a steady recovery, driving LME zinc upward. Social stocks still kept decreasing this week. SMM data showed that inbound quantity in Guangdong and Shanghai did not recover, while the overall zinc prices were low this week, which stimulated the downstream enterprises to actively stockpile. It is expected that the contract will keep fluctuating in the near term.

Nickel: The most-traded SHFE 2107 nickel contract ended the day 2.2% higher at 137,570 yuan/mt today. Open interest fell 14,883 lots to 74,662 lots.

Lead: The most-traded SHFE 2107 lead contract ended the day 0.94% higher at 15,650 yuan/mt. Open interest rose 9,982 lots to 58,383 lots. Near the end of the month, the enthusiasm of purchasing in the spot market decreased, and the delivery and signing of orders under long-term contracts were the main ones. The circulation sources in the market were relatively abundant. The smelter's discount slightly expanded but the trading volume was insufficient. The market was in a strong wait-and-see sentiment. Whether the bulls of contract will retreat or not, and the support from the five-day moving average will be monitored tonight.

Tin: The most-liquid SHFE 2108 tin contract fell to a session low of 208,070 yuan/mt and finished the day 0.75% higher at 209,900 yuan/mt today. Open interest rose 633 lots to 41,650 lots. The state's strengthening of supervision over the supply and price stability of bulk commodities created resistance to the continued rise of tin prices. Tight domestic supply supported the high-level operation of SHFE tin. It is expected that the contract will keep fluctuating at high in the near term. Pressure above will be seen from 212,000 yuan/mt today. Support below will be seen from 205,500 yuan/mt today.