SMM Morning Comments (Mar 2): Shanghai base metals fell across the board following strong gains overnight for shares on Wall Street

SHANGHAI, Mar 2 (SMM) — Shanghai base metals declined across the board on Tuesday morning. Meanwhile, their counterparts on the LME rose for the most part.

Shanghai base metals fell across the board in overnight trading. Copper fell 1.27%, aluminium declined 0.91%, zinc shed 0.54%, tin weakened 3.55%, lead slid 0.16% and nickel edged down 0.65%.

The LME complex mostly advanced on Tuesday. Copper added 0.34%, zinc rose 0.41%, lead went up 0.19% and nickel strengthened 0.35%, while aluminium slid 1.67% and tin fell 5.9%.

Copper: Three-month LME copper rose 0.34% to end at $9031/mt on Monday, and is likely to trade between $9,000-9,100/mt today.

The most-active SHFE 2104 copper contract went down 1.13% to close at 66,690 yuan/mt in overnight trading, and it is expected to move between 66,300-66,900 yuan/mt today, while spot copper will be traded between discounts of 60-50 yuan/mt.

It was announced at night that US ISM manufacturing index in February had the fastest growth in three years, and the positive data boosted the US index to return to above 91, and copper contracts continued to fall under pressure. In addition, in terms of crude oil, US oil plunged more than 2% yesterday, refreshing the low of nearly one week to $59.96/barrel, which was also good for copper contracts. It is estimated that copper contracts have limited callback space. On the spot side, at the beginning of March, the transaction under long-term contracts started, and the market activity will return to the trading heat. Traders are more interested in buying in the discount state. However, with the continuous repair of the contracts, the downstream market entry will further increase, and it is expected that the discount rate will continue to rise steadily in the near term.

Aluminium: Three-month LME aluminium fell 1.67% to close at $2,121/mt on Monday, with open interest falling to 705,000 lots. It is expected to trade between $2,000-2,180/mt today.

The most-liquid SHFE 2014 aluminium contract fell 0.53% to settle at 16,930 yuan/mt on Monday night, and is likely to trade between 16,600-17,100 yuan/mt today. Yesterday, the spot trading improved, and the downstream restocking efforts increased slightly. It is expected that the intraday premium will be flat or slightly narrowed compared with the previous day. Spot premiums for the contract will be seen higher at 50-30 yuan/mt.

Zinc: Three-month LME zinc rose 0.41% to close at $2,792/mt on Monday. Zinc stocks at LME-listed warehouses fell 50 mt to 269,725 mt. The US 1.9 trillion stimulus bill passed the House of Representatives overnight, which will be reviewed by the Senate this week. The implementation of the US economic stimulus plan will be monitored in the near term. The contract is likely to trade between $2,750-2,800/mt today.

The most-liquid SHFE 2104 zinc contract fell 0.61% to end at 21,210 yuan/mt in overnight trading. At present, the spot market transactions are still relatively tepid, and the rising stocks restrained the price increase of SHFE zinc. The "two sessions" in China are just around the corner, and the Politburo meeting once again set a proactive fiscal policy and a prudent monetary policy, focusing on maintaining stable economic operation. The setting of major economic goals of the two sessions this year and the 14th Five-Year Plan will be monitored. The SHFE zinc contract is expected to move between 21,000-21,500 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 50-60 yuan/mt.

Lead: Three-month LME lead settled 0.19% higher at $2,067/mt on Monday. The support from 40-day moving average will be monitored today.

The most-active SHFE 2104 lead contract went down 0.16% to close at 15,370 yuan/mt on Monday night. Since March, battery enterprises have gradually resumed work to restock, and the recovery of downstream consumption is worth looking forward to. Whether the contract could continue its nighttime trend and stand firm at 20-day moving average will be monitored today.

Tin: Three-month LME tin closed down 6.54% at $23,595/mt on Monday. LME tin plunged more than 10% overnight, because it triggered technical selling after hitting a nine-year high last week, prompting investors to lock in profits, but supply shortage limited the decline. The tight supply and strong demand for electronic products have promoted the growth of Asian manufacturing industry, pushed up tin prices, and caused the spot prices to rise sharply compared with futures. The US dollar index once refreshed the high point since February 8 to 91.13. The market expects that as the US government prepares to offer new fiscal stimulus measures and vaccination becomes more common, economic growth and inflation will accelerate. In the past few trading days, the US dollar rose, following the upward trend of US bond yield. The benchmark 10-year US bond yield rose to 1.432% on Monday, but remained below the one-year high of 1.614% hit last Thursday. There is a need for adjustment after the continuous rise of LME tin, Pressure above will be seen from $26,000 /mt today. Support below will be seen from $23,000/mt today.

The most-liquid SHFE 2104 tin contract fell 2.81% at 177,190 yuan/mt on Monday night. The guidance of LME tin on the trend of SHFE tin will be monitored in the near term. Pressure above will be seen from 184,500 yuan/mt today. Support below will be seen from 166,500 yuan/mt today.