SMM Morning Comments (Sep 29): Shanghai base metals strengthened across the board as the dollar pulls back from highs

SHANGHAI, Sep 29 (SMM) — Shanghai base metals all cruised higher on Tuesday morning, holding onto overnight gains, as the dollar retreated from a two month high, while their counterparts on the LME traded mixed as investors await the first debate between President Donald Trump and Democratic nominee Joe Biden.

Shanghai base metals rose across the board in overnight trading. Tin jumped 2.19% to lead the gains, copper added 0.14%, aluminium advanced 1.68%, zinc rose 2.11%, lead strengthened 1.08% and nickel climbed 0.53%.

The LME complex performed similarly. Copper added 0.66%, aluminium rose 1.28%, zinc jumped 2.38%, lead advanced 0.65%, nickel strengthened 0.83% and tin climbed 1.88%.

Copper: Three-month LME copper added 0.66% to close at $6,595/mt on Monday, and is expected to trade between $6,590-6,660/mt today.

The most-traded SHFE 2011 copper contract climbed to a session high of 51,450 yuan/mt after the bell, before giving up some gains to end 0.14% higher at 50,960 yuan/mt in overnight trading. It is likely to move between 50,900-51,400 yuan/mt today, while spot premiums will be seen higher at 40-120 yuan/mt.

The US dollar index, which measures the greenback against a basket of its peers, pulled back from a two-month high, and the three major US stock indexes all closed higher. US House Speaker Nancy Pelosi said on Sunday that she thought a deal could be reached with the White House on a fresh coronavirus relief bill as talks continued, which boosted market sentiment.

Aluminium: Three-month LME aluminium settled 1.28% firmer at $1,784.5/mt on Monday, and is expected to move between $1,740-1,790/mt today.  

The most-liquid SHFE 2011 aluminium contract strengthened 1.68% to end at 14,210 yuan/mt in overnight trading. It is likely to trade between 14,100-14,400 yuan/mt today, while spot premiums will be seen at 300-360 yuan/mt.   

Zinc: Three-month LME zinc jumped 2.38% to close at $2,431/mt on Monday. Zinc stocks across LME-listed warehouses shrank 2,175 mt or 0.99% to 218,175 mt. The US dollar retreating from highs and stronger US stocks boosted nonferrous metals, but economic recovery slowdown and political uncertainties kept investors on edge. LME zinc is likely to trade between $2,390-2,440/mt today.

The most-traded SHFE 2011 zinc contract climbed 2.11% to end at 19,315 yuan/mt in overnight trading. Some smelters stockpiled raw materials in advance for the winter as they expect zinc concentrate supply to be tight in the fourth quarter, and treatment charges continued to fall. The November zinc contract is expected to fluctuate betwee 19,000-19,500 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen lower at 140-150 yuan/mt against the October contract.

Nickel: The most-liquid SHFE 2012 nickel contract ended 0.53% higher at 113,210 yuan/mt in overnight trading, and is expected to trade between 112,000-114,000 yuan/mt today.

Lead: Three-month LME lead dropped to its lowest in two months at $1,818.5/mt before reversing some losses to end 0.65% higher at $1,850/mt on Monday.

The most-active SHFE 2011 lead contract rose 1.08% to settle at 14,975 yuan/mt in overnight trading.

Tin: Three-month LME tin settled 1.88% firmer at $17,355/mt on Monday, and pressure above will be seen from the five-day moving average of $17,563/mt today.

The most-liquid SHFE 2012 tin contract closed 1.88% higher at 142,590 yuan/mt in overnight trading, and pressure above will be seen from the 10-day moving average of 143,500 yuan/mt today.