SMM Morning Comments (Jul 5): Shanghai base metals rose across the board as US jobs report beat expectations

Published: Jul 5, 2021 10:00

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Shanghai base metals were mostly higher on Monday morning as investors digested a better-than-expected US jobs report. Meanwhile, their counterparts on the LME fell for the most part.

SHANGHAI, Jul 5 (SMM) — Shanghai base metals were mostly higher on Monday morning as investors digested a better-than-expected US jobs report. Meanwhile, their counterparts on the LME fell for the most part.

Shanghai base metals all closed higher in overnight trading. Copper rose 0.47%, zinc increased 0.39%, aluminium added 0.64%, nickel jumped 1.49%, lead advanced 0.76% and tin went up 1.08%.

The LME complex performed similarly on Friday. Copper added 1.19%, aluminium rose 1.93%, tin increased 0.7%, lead went up 1.8%, zinc advanced 0.05% and nickel strengthened 1.3%.

Copper: Three-month LME copper rose 1.19% to end at $9,379/mt on last Friday, and is likely to trade between $9,280-9,360/mt today.

The most-active SHFE 2108 copper contract went up 0.35% to close at 68,580 yuan/mt in overnight trading, and it is expected to move between 67,900-68,600 yuan/mt today, while spot premiums will be seen at 80–160 yuan/mt.

It was announced on Friday that the number of nonfarm payrolls in the US increased by 850,000, exceeding market expectations, but the unemployment rate rose from 5.8% in May to 5.9%, indicating that there is still idle supply in the labor market. After the strong US employment report showed a slight increase in unemployment rate, the market thought that the Federal Reserve might not be in a hurry to tighten monetary policy immediately. The US dollar index fluctuated and fell after rising for seven days in the near future, while copper futures closed up slightly.

Zinc: Three-month LME zinc rose 0.05% to close at $2,935.5/mt on last Friday. Zinc stocks at LME-listed warehouses fell 525 mt to 253,075 mt. The US dollar dropped at a high level last Friday, which led to a slight increase in zinc prices. The US nonfarm payrolls report in June was mixed, and the data supported the market's view that the Fed would not rush to shrink its bond purchase program immediately. The contract is likely to trade between $2,900-2,950/mt today.

The most-liquid SHFE 2108 zinc contract rose 0.25% to end at 22,105 yuan/mt in overnight trading. On fundamentals, social inventories once again fell, which provided basic support for zinc prices. However, domestic TCs rose again, indicating that the supply at the ore end was gradually loose, and after the reserves are gradually landed, social inventories will have an inflection point, and zinc prices will weaken. The SHFE zinc contract is expected to move between 21,600-22,100 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 140-150 yuan/mt.

Nickel: The most-active SHFE 2108 nickel contract rose 1.49% to close at 136,000 yuan/mt on last Friday. At present, although the nickel market is basically multi-oriented, nickel prices are suppressed by the adjustment expectation of international macro policies and the strengthening regulation of domestic commodities. The contract is likely to fluctuate widely this week.

Lead: Three-month LME lead settled 1.8% higher at $2,308/mt on last Friday. LME lead stocks continued to decline, and overseas consumption kept optimistic expectations. Whether the contract could maintain its upward trend and once again move above $2,300/mt will be monitored today.

The most-active SHFE 2108 lead contract went up 0.76% to close at 15,850 yuan/mt on Friday night. The fundamentals of the domestic lead market were relatively weak amid insufficient spot trading, and the stocks piled up in line with expectation. After the lead strengthened, the intention of trading in the trading market got stronger. Whether the contract could stand firm above the five-day moving average should be monitored today.

Tin: Three-month LME tin closed up 0.7% at $31,520/mt on last Friday. The shortage of overseas supply supported the high-level operation of LME tin. Pressure above will be seen from $31,700/mt today. Support below will be seen from $31,000/mt today.

The most-liquid SHFE 2108 tin contract rose 1.08% at 213,830 yuan/mt on Friday night. Pressure above will be seen from 214,000 yuan/mt today. Support below will be seen from 208,000 yuan/mt today.

Market commentary Copper Aluminium Zinc Nickel Lead Tin

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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