SMM Morning Comments (Jul 16): Shanghai base metals rose across the board as jobless claims data helped

SHANGHAI, Jul 16 (SMM) — Shanghai base metals all cruised higher on Friday morning after the head of the Federal Reserve told Congress he saw no need to rush the shift towards tighter post-pandemic monetary policy. Meanwhile, their counterparts on the LME mostly cruised lower.

Shanghai base metals all closed higher in overnight trading. Copper rose 0.76%, zinc increased 1.16%, aluminium added 0.65%, nickel jumped 0.64%, lead advanced 1.05% and tin went up 1.21%.

The LME complex ended mostly higher on Thursday. Zinc added 1.65%, copper rose 0.96%, tin increased 0.83%, lead went up 1.41% and nickel strengthened 0.83%, while aluminium fell 0.24%.

Copper: Three-month LME copper rose 0.96% to end at $9,424/mt on Thursday, and is likely to trade between $9,420-9,500/mt today.

The most-active SHFE 2108 copper contract went up 0.76% to close at 69,100 yuan/mt in overnight trading, and it is expected to move between 68,900-69,500 yuan/mt today, while spot premiums will be seen at 210-300 yuan/mt.

Overnight, US jobless claims at the beginning of the week reached a new low during the pandemic period. The decrease in the number of initial jobless claims was in line with the overall economic recovery trend of the US. In addition, Federal Reserve Chairman Powell's biased remarks played down the market's worries about inflation and boosted the bullish sentiment.

Aluminium: Three-month LME aluminium fell 0.24% to close at $2,511/mt on Thursday.

The most-liquid SHFE 2108 aluminium contract rose 0.65% to settle at 19,470 yuan/mt on Thursday night.

Global liquidity is abundant, and domestic economic development is stable and improving. On fundamentals, the current aluminium consumption shows signs of weakening, while the aluminium ingot inventories are still in the decreasing cycle. Recently, power curtailment policies have been reported again in Yunnan, Henan and other places, which has impacted both the supply and demand sides. At present, the impact on the supply side is more serious, and the specific impact degree still needs further follow-up. Domestic aluminium prices are expected to continue to rise in the near term under the stimulation of power curtailment and other events, and problems such as the progress of power curtailment, inventory inflection points and changes in sentiment of long and short positions still need continuous attention.

Zinc: Three-month LME zinc rose 1.65% to close at $2964/mt on Thursday. Zinc stocks at LME-listed warehouses fell 200 mt to 248,925 mt. Overnight, US jobless claims at the beginning of last week reached a new low during the pandemic period. The continuation of Federal Reserve Chairman Powell's doves played down inflation concerns and boosted bullish sentiment. The contract is likely to trade between $2,930-2,980/mt today.

The most-liquid SHFE 2108 zinc contract rose 1.16% to end at 22,190 yuan/mt in overnight trading. The overseas easing policy continued, the power curtailment in Yunnan caused disturbance fundamentally, leading to the worries about supply amid low social inventories. However, it is expected that the contract will keep fluctuating in the near term after reserving zinc ingots. The SHFE zinc contract is expected to move between 21,700-22,200 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 210-230 yuan/mt.

Nickel: The most-active SHFE 2108 nickel contract rose 0.64% to close at 139,550 yuan/mt on Thursday. Nickel prices fluctuated at a high level, and expectations for stainless steel production reduction further fermented due to the short supply of ferrochromium, and the prices of contracts and spots continued to rise strongly. However, the reduction of stainless steel production is a negative factor for nickel, so the trend of nickel in the past two days is weaker than that of stainless steel. The consolidation of the contract in the range of 138,000-140,000 yuan/mt will continue to be monitored today.

Lead: Three-month LME lead settled 1.14% higher at $2329.5/mt on Thursday. LME lead stocks continued to decrease, and whether the contract could continue to hit a low rebound trend and stand firm above the five-day moving average will be monitored tonight.

The most-active SHFE 2108 lead contract went up 0.38% to close at 15,950 yuan/mt on Thursday night. The contract will test pressure from 16,000 yuan/mt today.

Tin: The most-liquid SHFE 2108 tin contract rose 1.21% to end at 224,200 yuan/mt on Thursday night. Support below will be seen from 222,000 yuan/mt today.