SMM Morning Comments (Apr 27): Shanghai base metals strengthened across the board as S&P 500 and Nasdaq close at record highs

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SHANGHAI, Apr 27 (SMM) — Shanghai base metals all cruised higher on Tuesday morning, while their counterparts on the LME fell for the most part. 

Shanghai base metals closed broadly higher in overnight trading. Copper added 0.83%, aluminium advanced 0.76%, zinc jumped 2.25%, nickel rose 1.87% and lead gained 0.42%, while tin shed 0.05%. 

The LME complex rose across the board on Monday. Copper increased 2.37%, aluminium gained 1.48%, zinc surged 2.68%, nickel strengthened 1.92%, lead rose 1.02% and tin climbed 1.12%. 

Copper: Three-month LME copper jumped 2.37% to close at $9,778/mt on Monday, while the most-traded SHFE 2106 copper contract gained 0.83% to end at 71,570 yuan/mt in overnight trading. The S&P 500 edged higher to close at another record on Monday, while the tech-heavy Nasdaq Composite climbed 0.9% to hit its first fresh record close since Feb. 12, as driven by strong corporate earnings and expectations that the US Federal Reserve will keep easy monetary policies.  LME copper is expected to trade between $9,770-9,850/mt today, and SHFE copper between 71,200-71,800 yuan/mt, while spot copper will be traded between discounts of 220-120 yuan/mt.

Aluminium: Three-month LME aluminium climbed 1.48% to settle at $2,404/mt on Monday, and is expected to move between $2,390-2,410/mt today.

The most-active SHFE 2106 aluminium contract advanced 0.76% to close at 18,485 yuan/mt in overnight trading. Social inventories of aluminium ingots stood at 1.14 million mt in China as of April 26, down 1,000 mt from last Thursday, which supported aluminium prices. The June contract is likely to fluctuate between 18,400-18,600 yuan/mt today.

Zinc: Three-month LME zinc surged 2.68% to end at $2,927/mt on Monday, with open interest adding 1,215 lots to 246,000 lots. Zinc stocks across LME-listed warehouses shrank by 275 mt or 0.09% to 293,275 mt. LME zinc is likely to move between $2,900-2,950/mt today.

The most-liquid SHFE 2106 zinc contract rose 2.25% to settle at 22,235 yuan/mt in overnight trading, with open interest rising 9,068 lots to 94,262 lots. It is likely to move between 21,800-22,300 yuan/mt today, while spot discounts for domestic 0# Shuangyan will be seen at 30 yuan/mt against the May contract.

Nickel: The most-traded SHFE 2106 nickel contract closed 1.87% higher at 124,430 yuan/mt in overnight trading, with open interest rising 3,547 lots to 149,000 lots.

Lead: Three-month LME lead advanced 1.02% to end at $2,078/mt on Monday. Positive economic data overseas and a continued decline in LME lead stocks boosted lead prices. Whether the contract could steady above the five-day moving average today will be monitored. 

The most-active SHFE 2106 lead contract added 0.42% to settle at 15,400 yuan/mt in overnight trading.  Lead prices are expected to remain high this week as lead supply is likely to remain tight ahead of the Labour Day holiday.

Tin: Three-month LME tin closed 1.12% firmer at $27,150/mt on Monday. The Federal Open Market Committee ends its two-day meeting on Wednesday, and while no major policy changes are expected, investors will pay close attention to comments from Chairman Jerome Powell. Powell is likely to face questions over whether an improving labour market and rising coronavirus vaccinations warrant a withdrawal of monetary easing. Most analysts though expect him to say such talk is premature, which could put downward pressure on Treasury yields and the dollar. LME tin is expected to move between $26,500-27,500/mt today.

The most-liquid SHFE 2106 tin contract edged down 0.05% to end at 186,420 yuan/mt in overnight trading, with open interest losing 928 lots to 22,877 lots. It is expected to fluctuate between 183,000-188,000 yuan/mt today.