SMM Morning Comments (Sep 22): Shanghai base metals were mostly lower following overnight dollar bounce-back

SHANGHAI, Sep 22 (SMM) — Shanghai base metals mostly traded lower on Tuesday morning, while their counterparts on the LME cruised higher for the most part, as the US dollar rebounded on worries about the economic recovery from the coronavirus crisis.    

Shanghai base metals fell across the board in overnight trading. Nickel declined 2.14% to lead the losses, copper fell 1.45%, aluminium slid 0.55%, lead weakened 1.29%, zinc shed 1.89% and tin slipped 1.11%.

The LME complex performed similarly. Copper plunged 2.43%, aluminium weakened 0.75%, lead shed 0.91%, zinc slid 2.96%, nickel declined 2.09% and tin edged down 0.17%.

Copper: Three-month LME copper settled 1.45% lower at $6,683.5/mt on Monday, and is likely to move between $6,650-6,730/mt today.

The most-traded SHFE 2010 copper contract closed 1.45% weaker at 51,500 yuan/mt in overnight trading, and is expected to trade between 51,300-51,900 yuan/mt today, while spot premiums will be seen at 40-100 yuan/mt.

Overnight, stocks on US and European markets plunged as climbing COVID-19 cases triggered worries among investors, and risk-aversion demand boosted the US dollar index to rebound to a six-week high, weighing on copper futures. Besides, oil prices tumbled more than 4% as a potential return of Libyan production bolstered oversupply fears and possible renewed lockdown measures aimed to prevent the spread of COVID-19 sparked concerns on oil demand.

Aluminium: Three-month LME aluminium came off an intraday high of $1,804/mt to end 0.75% lower at $1,782/mt on Monday.

The most-liquid SHFE 2010 aluminium contract followed its LME counterpart lower in overnight trading, sliding 0.55% to settle at 14,575 yuan/mt, as investors reduced long positions. But with support from fundamentals, the October contract is expected to move between 14,450-14,800 yuan/mt today, while spot premiums are seen at 130-150 yuan/mt.

Zinc: Three-month LME zinc fell from a nearly three-week high of $2,554/mt to its lowest in more than one week at $2,440.5/mt, before wiping out some losses to close 2.96% lower at $2,472/mt on Monday. Zinc stocks across LME-listed warehouses shrank 200 mt or 0.09% to 219,325 mt. US dollar bounce-back, plunged US stocks, rising global COVID-19 cases that may lead to renewed lockdowns and uncertainty over more fiscal stimulus stoked worries about the economic recovery from the pandemic and drove up risk aversion sentiment in the market. But low treatment charges (TCs) for imported zinc concentrate suggested tight concentrate supply overseas, which provided some support to zinc prices. LME zinc is expected to trade between $2,450-2,500/mt today.   

The most-traded SHFE 2011 zinc contract slid 2.11% to close at 19,495 yuan/mt in overnight trading, after earlier hitting a session low of 19,310 yuan/mt. Oil prices plunged more than 4% on Monday, as rising coronavirus infections deepened worries about fuel demand, but low zinc social inventories and restocking demand from downstream users ahead of the National Day holiday will underpin zinc prices. The November contract is likely to fluctuate between 19,300-19,800 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 170-190 yuan/mt over the October contract.  

Nickel: The most-liquid SHFE 2011 nickel contract shed 2.14% to close at 112,870 yuan/mt in overnight trading. A second wave of the COVID-19 pandemic in many countries deepened market panic. Whether the November contract could claw back some losses will come under scrutiny today.  

Lead: Three-month LME lead dropped from an intraday high of $1,917.5/mt to slump to its lowest in nearly two weeks at $1,867/mt, before reversing some losses to close 0.91% weaker at $1,897/mt on Monday.  

The most-active SHFE 2011 lead contract came off a session high of 15,110 yuan/mt to a session low of 14,865 yuan/mt before regaining some ground to settle 1.29% lower at 14,955 yuan/mt in overnight trading.  

Tin: Three-month LME tin fell from an intraday high of $18,300/mt to an intraday low of $17,950/mt, before regaining some ground to end 0.17% lower at $18,070/mt on Monday. It is expected to move between $18,000-18,150/mt today.

The most-liquid SHFE 2011 tin contract ended 1.11% lower at 143,980 yuan/mt in overnight trading, after earlier hitting a session low of 143,020 yuan/mt. Support below will be seen from the 60-day moving average of 143,750 yuan/mt today.