SHANGHAI, Aug 11 (SMM) – Shanghai base metals trended higher on Wednesday morning after US Senate passed the $1 trillion infrastructure bill. Meanwhile, their counterparts on LME mostly fell.
LME metals all increased on Tuesday. Copper rose 1.56%, aluminium advanced 1.25%, lead gained 0.11%, and zinc increased 1.61%.
SHFE metals rose across the board last night. Copper increased 1.21%, aluminium gained 1.59%, lead rose 0.45%, zinc advanced 0.81%, and tin rose 2.0%.
Copper: Three-month LME copper rose 1.56% to end at $9512.5/mt on Tuesday night, and is expected to trade between $9,480-9,520/mt today.
The most liquid SHFE 2109 copper contract increased 1.21% to end at 70,110 yuan/mt last night, and is expected to trade between 70,000-70,250 yuan/mt today, with spot premiums between 110-200 yuan/mt.
US Senate passed a $1 trillion cross-party infrastructure bill, and oil prices earned a largest gain in the past two weeks, both of which boosted copper prices. BHP Billiton and Escondida copper mine may reach a wage agreement, which eased the strike concerns. However, the news had little impact on copper prices as it was within expectation. Downstream users only purchased on rigid demand yesterday amid the pandemic, and the overall market trade remained quiet. The spot premiums in Shanghai may decline slightly amid surging futures prices and the continuous inflow of imported copper.
Aluminium: Three-month LME aluminium advanced 1.25% to end at $2,586/mt on Tuesday.
The most active SHFE 2109 aluminium contract gained 1.59% to close at 20,175 yuan/mt last night.
The passed US $1 trillion infrastructure plan pushed SHFE aluminium over 20,000 yuan/mt.
The fundamental supply remained tight, as the expanding power curtailment limited the aluminium supply in Inner Mongolia, Yunnan, Guangxi, and Guizhou. The inventories of lead ingots kept falling despite the off season due to the flood in Henan and the impeded transportation in the pandemic. Today’s focus will be the pandemic, the power curtailment, and the supply of aluminium reserve and imported resources. The decrease in aluminium inventory may narrow today, and SHFE aluminium is expected to trade between 19900-19,900 yuan/mt.
Lead: Three-month LME lead gained 0.11% to close at $2,299/mt in the overnight trading on Tuesday after bears left the market with profits. Lead stocks across LME-listed warehouses fell 175 mt to 58,325 mt overnight, and lead prices stabilised. However, US dollar rose to 93 points, weighing on the gains of LME metals. Whether the prices can keep rising and break the 10-day and 5-day moving averages is worth attention today.
The most traded SHFE 2109 lead contract rose 0.45% to settle at 15,490 yuan/mt. Whether the prices can remain upward and test the 5-day moving average will be the focus today.
Zinc: Three-month LME zinc increased 1.61% to end at $3,000/mt last night, after hitting the highest level at $3,007/mt. Zinc stocks across LME-listed warehouses dropped by 250 mt or 0.1% to 248,250 mt. US Senate passed a $1 trillion infrastructure bill, which boosted market sentiments and drove up LME metals. Today’s focus will be the US annual and monthly CPI after seasonal adjustment at the end of July. LME zinc is expected to fluctuate between $2,960-3,010/mt today.
The most-liquid SHFE 2109 zinc contract closed 0.81% higher at 22,490 yuan/mt in overnight trading, with open interest up 3,639 lots to 140,000 lots. Zinc prices rebounded after the US $1 trillion infrastructure bill was passed. Domestic power supply was tight, and smelters in Yunnan, Guangxi, Hunan and other regions continued to limit production, resulting in a month-on-month decline in zinc ingot output. The low domestic inventories of lead ingot also provided support for zinc prices. The second batch of released reserve has been gradually picked up, and the downstream demand will decline in the short term. The market will be alert to the pandemic disturbance in the consumption. Zinc prices will remain volatile within a wide range. The SHFE 2109 contract is expected to move between 22,200-22,700 yuan/mt today, and spot premiums for domestic 0# Shuangyan zinc will be seen at 150-160 yuan/mt against the September contract.
Tin: The most traded SHFE 2109 tin contract rose 2.0% to end at 237,510 yuan/mt in the overnight trading yesterday, with open interest up 476 lots.
Bulls strongly added positions after opening last night. At fundamentals, the recent low inventory and warehouse receipts was supporting the prices. Bulls had a temporary advantage over the bears in the long-short game. The price trend will be affected by the willingness of new funds to enter the market and the funds’ acceptance of the current prices. The prices are likely to trade with the support at 236,000 yuan/mt today, with the pressure level unclear.