SMM Morning Comments (Sep 15): Shanghai base metals were mostly higher on better-than-expected China macro data

SHANGHAI, Sep 15 (SMM) — Shanghai base metals, except for tin, cruised higher on Tuesday morning, holding onto overnight gains, as both industrial production and retail sales of China bettered estimates, while their counterparts on the LME rose across the board on dollar weakness and dovish Fed policy hopes.

China's industrial output rose 5.6% in August from a year ago, expanding for the fifth straight month in a boost to an economy trying to regain its footing from the shock of the coronavirus outbreak.

China's retail sales rose 0.5% last month from a year earlier, data showed, expanding for the first time this year, beating analysts' forecast for zero growth and compared with a 1.1% drop in July.

Shanghai base metals rose for the most part in overnight trading. Copper added 0.23%, aluminium advanced 0.76%, zinc climbed 0.51%, lead rose 1.07% and nickel strengthened 0.95%, while tin shed 0.19%.

The LME complex increased across the board on Monday. Copper added 0.96%, aluminium rose 1.52%, zinc advanced 0.34%, lead increased 1.72%, nickel strengthened 1.03% and tin firmed 0.78%.

Copper: Three-month LME copper closed 0.96% higher at $6,779.5/mt on Monday, after hitting an intraday high of $6,800/mt earlier in the session. It is likely to move between $6,750-6,810/mt today.  

The most-traded SHFE 2010 copper contract strengthened 0.23% to end at 52,190 yuan/mt in overnight trading, and is expected to trade between 51,800-52,300 yuan/mt today, with spot premiums higher at 80-130 yuan/mt.

LME copper stocks fell to 74,875 mt, the lowest level since 2005. Robust demand kept copper prices at high level.

Aluminium: Three-month LME aluminium ended 1.52% higher at $1,802/mt on Monday, after hitting an intraday high of $1,805/mt earlier in the session. It is likely to move between $1,780-1,820/mt today.   

The most-liquid SHFE 2010 aluminium contract closed 0.76% firmer at 14,525 yuan/mt in overnight trading, and is likely to trade between 14,300-14,650 yuan/mt today, with spot premiums stable at 20 yuan/mt.

Zinc: Three-month LME zinc added 0.34 to end at $2,480.5/mt on Monday, after hitting an intraday high of $2,488/mt earlier in the session. Zinc stocks across LME-listed warehouses remained unchanged at 219,770 mt. Weaker US dollar and positive news about a COVID-19 vaccine boosted market sentiment. It is expected to move between $2,450-2,500/mt today.  

The most-traded SHFE 2010 zinc contract settled 0.51% higher at 19,760 yuan/mt in overnight trading. Although arrivals of imported zinc increased and smelters stepped up production, zinc social inventories continued to shrink as downstream users restocked actively in a high season, which provided strong support to zinc prices. The October contract is likely to move between 19,500-20,000 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen higher at 230-250 yuan/mt.

Nickel: The most-liquid SHFE 2011 nickel contract ended 0.95% firmer at 118,840 yuan/mt in overnight trading. Whether the contract could steady above 119,000 yuan/mt today will come under scrutiny.

Lead: Three-month LME lead bounced off an intraday low of $1,884/mt to an intraday high of $1,930/mt before paring some gains to end 1.72% higher at $1,924/mt on Monday.

The most-active SHFE 2010 lead contract settled 1.07% higher at 15,095 yuan/mt in overnight trading. Downstream users restocked ahead of the National Day holiday, which boosted lead prices.