SMM Morning Comments (Feb 8) Shanghai base metals rose broadly after US jobs report

SHANGHAI, Feb 8 (SMM) — Shanghai base metals were mostly higher on Monday morning, holding onto earlier gains, as the U.S. Labor Department reported that the U.S. added 49,000 jobs in January, while the unemployment rate fell to 6.3%, in the first employment report of the Biden administration. 

Shanghai base metals were mostly higher last Friday night. Copper added 0.22%, aluminium rose 1.65%, zinc advanced 0.43%, nickel rose 1.48% and tin gained 1.56%, while lead weakened 0.46%. 

The LME complex all closed higher last Friday. Copper jumped 2.16%, aluminium increased 1.23%, zinc strengthened 1.71%, lead gained 1.42%, nickel surged 2.78% and tin firmed 0.7%. 

Copper: Three-month LME copper rose 2.16% to close at $7,983/mt last Friday, while the most traded SHFE 2103 copper contract added 0.22% to end at 58,340 yuan/mt last Friday night.

The U.S. Labor Department reported that the U.S. added 49,000 jobs in January, while the unemployment rate fell to 6.3%, in the first employment report of the Biden administration. U.S. employment growth rebounded less than expected in January and job losses the prior month were deeper than initially thought, strengthening the argument for additional relief money to aid the recovery from the COVID-19 pandemic. U.S. President Joe Biden cited the report as he and his Democratic allies pushed ahead with steps toward their $1.9 billion COVID-19 relief package, including a vote in the Senate and another expected in the House. The moves aim to secure the spending before special unemployment benefits expire on March 15. Trades were quiet in the spot market as market participants started the Chinese New Year holiday.

LME copper is expected to trade between $7,960-8,040/mt today, and SHFE copper between 58,500-59,000 yuan/mt, while spot copper will be traded between discounts of 50 yuan/mt and premiums of 60 yuan/mt.

Aluminium: Three-month LME aluminium advanced 1.23% to settle at $2,019/mt last Friday, with open interest decreasing 3,086 lots to 725,000 lots.

The most-liquid SHFE 2103 aluminium contract gained 1.65% to close at 15,710 yuan/mt last Friday night. It is expected to move between 15,300-15,800 yuan/mt today.

Zinc: Three-month LME zinc ended 1.71% higher at $2,684/mt last Friday, with open interest losing 989 lots to 233,000 lots, posting a three-day winning streak.  Zinc stocks across LME-listed warehouses dropped by 450 mt or 0.15% to 290,350 mt. A weak US dollar and sluggish economic data drove up expectations of US economic stimulus package, which boosted market sentiment. LME zinc is likely to fluctuate between $2,640-2,690/mt today.

The most-traded SHFE 2103 zinc contract advanced 0.43% to settle at 20,040 yuan/mt last Friday night, with open interest rising 2,008 lots to 82,458 lots.  Zinc prices are likely to remain strong in the short term as the policy of encouraging people to stay where they work for the Spring Festival in order to reduce the possibility of being infected with COVID-19 is likely to boost zinc consumption. The March contract is likely to move between 19800-20300 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen at 30-40 yuan/mt against the March contract.

Nickel: In terms of fundamentals, downstream consumption of stainless steel was better than expected, supporting demand for nickel. As stainless steel prices increased, high-grade NPI prices also improved. In addition, consumption of nickel sulphate was strong as companies in the new energy sector brought forward their procurements.   

The most-active SHFE 2104 nickel contract increased 1.48% to close at 133,290 yuan/mt last Friday night, with open interest decreasing 1,797 lots to 162,000 lots.

Lead: Three-month LME lead firmed 1.42% to end at a more than one-week high of $2,065/mt last Friday. LME lead stocks shrank by 125 mt to 93,650 mt. 

The most-traded SHFE 2103 lead contract shed 0.46% to settle at 15,090 yuan/mt last Friday night.

Tin: Three-month LME tin added 0.7% to close at $23,140/mt last Friday. The dollar index of a basket of currencies was down 0.5% at 91.028, but still holding a weekly gain of 0.6%. U.S. employment growth rebounded less than expected in January and job losses the prior month were deeper than initially thought. LME tin is expected to trade between $22,500-24,000/mt today.

The most-liquid SHFE 2104 tin contract climbed 1.56% to close at 166,210 yuan/mt last Friday night, with open interest adding 1,105 lots to 35,774 lots. It is likely to move between 163,000-168,000 yuan/mt today.