SMM Morning Comments (Jun 29): Shanghai base metals were mixed as investors monitored rising Covid-19 cases around the globe

Published: Jun 29, 2021 10:00
Shanghai base metals mostly cruised lower on Tuesday morning despite gains overnight on Wall Street that saw the S&P 500 and Nasdaq Composite touching fresh record closing highs. Meanwhile, their counterparts on the LME traded mixed.

SHANGHAI, Jun 29 (SMM) — Shanghai base metals mostly cruised lower on Tuesday morning despite gains overnight on Wall Street that saw the S&P 500 and Nasdaq Composite touching fresh record closing highs. Meanwhile, their counterparts on the LME traded mixed.

Shanghai base metals closed mixed in overnight trading. Copper slid 0.19%, nickel declined 1.38% and aluminium weakened 0.16%, while zinc climbed 0.37%, tin rose 0.85% and lead increased 0.29%.

The LME complex ended mostly higher on Monday. Aluminium increased 1.81%, lead rose 1.04%, tin went up 1.02% and zinc strengthened 0.43%, while copper fell 0.21% and nickel weakened 1.26%.

Copper: Three-month LME copper fell 0.43% to end at $9,435/mt on Monday, and is likely to trade between $9,320-9,410/mt today.

The most-active SHFE 2108 copper contract went down 0.19% to close at 68,500 yuan/mt in overnight trading, and it is expected to move between 68,200-68,800 yuan/mt today, while spot premiums will be seen at 20–100 yuan/mt.

The People's Bank of China held a regular meeting on monetary policy in the second quarter yesterday, emphasizing that it is necessary to strengthen international macroeconomic policy coordination, prevent external shocks, and do a good job in cross-cycle policy design. In addition, funds have been put in in the past two days, indicating that the central bank has actions to maintain stability and liquidity. There was not much overseas news overnight, and the market was still very cautious when the Fed will raise interest rates due to inflation concerns, while copper futures remained weak and fluctuated within a narrow range at night. The PMI data of various countries to be released and the impact of the US dollar trend on copper prices should be monitored.

Aluminium: Three-month LME aluminium rose 1.46% to close at $2,531/mt on Monday. It is expected to trade between $2,480-2,550/mt today.

The most-liquid SHFE 2108 aluminium contract fell 0.16% to settle at 18,865 yuan/mt on Monday night, and is likely to trade between 18,600-19,100 yuan/mt today.

Zinc: Three-month LME zinc climbed up 0.36% and closed at $2,920/mt on Monday. Zinc stocks at LME-listed warehouses fell 1,775 mt to 255,675 mt. LME zinc kept fluctuating overnight, and the market continued to evaluate the inflation situation in the US and the Fed's response policies, and waited for key economic data such as nonfarm payrolls to be released later this week. The contract is likely to trade between $2,890-2,940/mt today.

The most-liquid SHFE 2108 zinc contract fell 0.07% to end at 21,825 yuan/mt in overnight trading. Recently, the arrivals of smelters are still not enough, and social inventories of zinc ingots are still at a low level, which provides support for zinc prices in the near term. However, due to the disturbance of environmental protection and limited production in the north, the galvanized enterprises start construction, which is expected to suppress zinc prices. The SHFE zinc contract is expected to move between 21,500-22,000 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 140-150 yuan/mt.

Nickel: The most-active SHFE 2107 nickel contract fell 1.38% to close at 135,680 yuan/mt on Monday. Open interests fell 14,657 lots to 33,825 lots. Three-month LME nickel fell 1.26% to close at $18,290/mt on Monday.

Lead: Three-month LME lead settled 0.52% higher at $2,243/mt on Monday. The contract will test pressure from $2,250/mt today.

The most-active SHFE 2108 lead contract went up 0.29% to close at 15,395 yuan/mt on Monday night. Whether the contract could stand firm above 15,400 yuan/mt will be monitored today.

Tin: Three-month LME tin closed up 1.02% at $31,165/mt on Monday. The US dollar fluctuated at a high level, while LME tin maintained its upward trend. On fundamentals, shortage of overseas supply supported high level operation of the contract. It is expected that LME tin will run at a high level in the near term. Pressure above will be seen from $31,500 /mt today. Support below will be seen from $30,500/mt today.

The most-liquid SHFE 2108 tin contract rose 0.85% to close at 210,860 yuan/mt on Monday night. Pressure above will be seen from 215,000 yuan/mt today. Support below will be seen from 208,000 yuan/mt today.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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