SMM Morning Comments (Jun 30): Shanghai base metals rose across the board as global investors looked to US jobs data

SHANGHAI, Jun 30 (SMM) — Shanghai base metals were mostly higher on Wednesday morning as global investors monitored the spread of the delta Covid-19 variant and awaited key economic data out of the US. Meanwhile, their counterparts on the LME also rose for the most part.

Shanghai base metals all closed higher in overnight trading. Copper rose 0.1%, zinc increased 0.66%, aluminium added 0.16%, nickel jumped 1.05%, lead advanced 2% and tin went up 0.2%.

The LME complex ended mostly higher on Tuesday. Zinc added 0.89%, aluminium rose 0.04%, tin increased 0.63%, lead went up 2.12% and nickel strengthened 0.57%, while copper fell 0.5%.

Copper: Three-month LME copper fell 0.51% to end at $9,346.5/mt on Tuesday, and is likely to trade between $9,310-9,400/mt today.

The most-active SHFE 2108 copper contract went down 0.06% to close at 68,220 yuan/mt in overnight trading, and it is expected to move between 68,100-68,700 yuan/mt today, while spot prices will be seen at premiums 30 yuan/mt – discounts 70 yuan/mt.

Overnight US economic data showed that the consumer confidence index hit a new high since the pandemic in June, and the house price index rose the most in more than 30 years in April. At the same time, with the economic restart, the economic confidence index of the euro zone rose to the highest level in more than 20 years in June. Under the optimistic expectation of the market for economic recovery, US stocks hit a record high again. However, last night, the US dollar index was affected by the rising yield of 10-year US Treasury bonds and the unexpected stimulation of the consumer confidence index of the Consultative Conference, which moved above 92 and brought some pressure on copper futures.

Zinc: Three-month LME zinc rose 0.89% to close at $2,946/mt on Tuesday. Zinc stocks at LME-listed warehouses fell 1,000 mt to 254,675 mt. Overnight, nonferrous metals generally rose, as economic data showed that the US house price and consumer confidence index rose strongly, and the house price rose the most in more than 30 years in April, boosting market optimism. The June nonfarm payrolls report released this week should be monitored. The contract is likely to trade between $2,920-2,970/mt today.

The most-liquid SHFE 2108 zinc contract rose 1.05% to end at 22,050 yuan/mt in overnight trading. Overnight, the upward movement of the LME zinc drove SHFE zinc to perform strongly. At present, domestic zinc ingot inventories are low, and the overseas demand is rising steadily. At the same time, the macro sentiment is restored, which boosts zinc prices. However, the medium-and long-term domestic fundamental pattern of increasing supply and decreasing demand does not change, which is expected to limit the upward height of zinc prices. It is expected that zinc prices will rise and fall back today. 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 140-150 yuan/mt.

Nickel: The most-active SHFE 2108 nickel contract rose 1.05% to close at 136,980 yuan/mt on Tuesday. Open interests rose 6,478 lots to 139,000 lots.

Three-month LME nickel climbed 0.57% to close at $18,395/mt on Tuesday. Open interests fell 402 lots to 214,000 lots.

At present, there is no obvious long position and short position factor in nickel fundamentals, and spot transactions are mainly weak. It is expected that nickel prices will still fluctuate widely.

Lead: Three-month LME lead settled 2.12% higher at $2,290.5/mt on Tuesday. Whether the contract could maintain its upward trend and stand firm above $2,300/mt will be monitored today.

The most-active SHFE 2108 lead contract went up 2% to close at 15,780 yuan/mt on Tuesday night. Trading activity in the domestic lead effect market is average, downstream purchasing is limited, and lead futures have risen sharply, which may bring enthusiasm for warehouse delivery and expectation for increasing stocks. The contract will test pressure from 15,800 yuan/mt today.

Tin: Three-month LME tin closed up 0.63% at $31,360/mt on Tuesday. Overall, the commodities strengthened, while LME tin maintained its upward trend. Fundamental shortage of overseas supply supported the contract's high-level operation. It is expected that the contract 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 0.2% to close at 211,140 yuan/mt on Tuesday night. Pressure above will be seen from 213,000 yuan/mt today. Support below will be seen from 208,000 yuan/mt today.