SMM Morning Comments (Oct 16): Shanghai base metals rose for the most part, the LME complex mostly fell

SHANGHAI, Oct 16 (SMM) — Shanghai base metals cruised higher for the most part on Friday morning, while their counterparts on the LME mostly weakened on larger-than-expected US weekly jobless claims.  

Shanghai base metals mostly closed in positive territory in overnight trading. Copper rose 0.86%, aluminium climbed 0.17%, zinc added 0.73% and nickel advanced 0.87%, while lead shed 0.38% and tin edged down 0.1%.

The LME complex ended mixed on Thursday. Copper added 0.96%, aluminium rose 0.51% and zinc climbed 0.99%, while lead weakened 0.22%, nickel slid 0.77% and tin fell 0.3%.

Copper: Three-month LME copper settled 0.96% firmer at $6,779/mt on Thursday, and is likely to trade between $6,730-6,800/mt today.

The most-active SHFE 2011 copper contract cruised 0.86% higher to end at 51,680 yuan/mt in overnight trading. It is expected to move between 51,400-51,900 yuan/mt today, while spot premiums will be seen higher at 180-230 yuan/mt.  

China’s new yuan loans and social financing data topped expectations as its economy has been recovering from the COVID-19 pandemic. The producer price index (PPI) for September inched up 0.1% on the month, but fell 2.1% on the year. In addition, US Democrats and Republicans made some progress in talks on COVID-19 stimulus package. However, a second wave of coronavirus cases and uncertainties over the outlook for the US presidential election are likely to affect copper prices.

Aluminium: Three-month LME aluminium strengthened 0.51% to end at $1,854.5/mt on Thursday, and is expected to fluctuate between $1,830-1,870/mt today.

The most-liquid SHFE 2011 aluminium generated a V-shaped movement before closing 0.17% higher at 14,685 yuan/mt in overnight trading. It is likely to move between 14,500-14,900 yuan/mt today.

Zinc: Three-month LME zinc finished the Thursday session 0.99% higher at $2,445/mt. Zinc stocks across LME-listed warehouses expanded 825 mt, or 0.38%, to 218,825 mt. US weekly jobless claims rose unexpectedly to the highest since August, and coronavirus cases continued to hike in European countries, which drove up risk-off sentiment. However, US President Donald Trump said he would agree to go higher than the $1.8 trillion that the White House has offered in coronavirus stimulus to strike a deal, and this boosted zinc prices. LME zinc is likely to move between $2,400-2,450/mt today.

The most-liquid SHFE 2011 zinc fell rapidly to a session low of 18,930 yuan/mt after the bell, before reversing all the losses to close 0.73% higher at 19,270 yuan/mt in overnight trading. China’s upbeat social financing data and consumer price index (CPI) boosted market sentiment. The November contract is expected to trade between 18,900-19,400 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen lower at 150-180 yuan/mt.

Nickel: Three-month LME nickel slid 0.77% to end at $15,400/mt on Thursday.

The most-active SHFE 2012 nickel contract climbed 0.87% to settle at 118,920 yuan/mt in overnight trading, and is likely to fluctuate around 119,000 yuan/mt today.

Lead: Three-month LME lead fell for the third straight day on Thursday, falling 0.22% to settle at $1,783.5/mt in choppy trading.

The most-traded SHFE 2011 lead contract slid 0.38% to close at 14,430 yuan/mt in overnight trading.

Tin: Three-month LME tin weakened 0.3% to end at $18,375/mt on Thursday, after hitting a more than one-month high at $18,400/mt earlier in the session. It is expected to move between $18,200-18,500/mt today.  

The most-liquid SHFE 2012 tin contract fluctuated above the five-day moving average in overnight trading, closing 0.1% weaker at 146,280 yuan/mt. It is likely to remain at highs today, moving between 145,000-148,000 yuan/mt.