SMM Morning Comments (Sep 11): Shanghai base metals were mostly lower after higher-than-expected US jobless claims

SHANGHAI, Sep 11 (SMM) — Shanghai base metals, except for aluminium, cruised lower on Friday morning, while their counterparts on the LME traded mixed, as data from US Labor Department showed that filings for unemployment claims remained high, suggesting a larbour market recovery from the coronavirus pandemic stalled.  

On the LME, nonferrous metals finished in negative territory on Thursday. Copper fell 1.86% to lead the losses, zinc slid 1.22%, lead declined 1.08%, nickel weakened 0.67%, tin shed 0.47% and aluminium slipped 0.31%.

Shanghai base metals, except for aluminium, closed lower in overnight trading. Copper fell 1.33%, zinc shed 0.62%, lead declined 1.91%, nickel weakened 0.54% and tin slid 0.97%, while aluminium rose 0.73%. 

Copper: Three-month LME copper declined 1.86% to end at $6,633/mt on Thursday, and is expected to move between $6,580-6,640/mt today.

The most-active SHFE 2010 copper contract came off an intraday high of 52,190 yuan/mt to close 1.33% lower at 51,370 yuan/mt in overnight trading, and is likely to trade between 51,200-51,700 yuan/mt today, with spot premiums lower at 70-140 yuan/mt.   

US continuing claims for unemployment insurance stood at 13.39 million in the seven days ended August 29. It was the first increase in five weeks. Grim outlook on economic recovery boosted risk aversion sentiment, weighing on copper prices. Besides, US dollar index rebounded overnight, returning above 93, and three of the major US stock indexes all closed lower, which also dragged on copper prices. LME copper stocks increased for the first time since August 17, but remained at low levels.   

Zinc: Three-month LME zinc rebounded from a more than three-week low of $2,383/mt to close 1.22% weaker at $2,397.5/mt on Thursday. Zinc stocks across LME-listed warehouses stayed at high levels, dipping 50 mt or 0.02% to 219,725 mt. Larger-than-expected US jobless claims and absence of further economic stimulus packages deepened market panic. LME zinc is expected to move between $2,380-2,430/mt today.     

The most-traded SHFE 2010 zinc contract slid 0.62% to settle at 19,175 yuan/mt in overnight trading. Stronger US dollar index weighed on zinc prices. Decent profits encouraged domestic smelters to ramp up production, while stocks in the spot market continued to fall as zinc prices declined. The October zinc contract is likely to trade between 19,000-19,500 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen higher at 200-230 yuan/mt.   

Nickel: The most-active SHFE 2011 nickel contract rebounded from a more than two-week low of 115,180 yuan/mt to end 0.54% lower at 115,900 yuan/mt in overnight trading. Pressure above from the five-day moving average will come under scrutiny today.

Lead: Three-month LME lead fell 1.08% to close at $1,874/mt on Thursday, after hitting its lowest level in 27 trading days earlier in the session. Bearish sentiment triggered by geopolitical risks may continue to weigh on lead prices.   

The most-active SHFE 2010 lead contract ended 1.91% lower at 14,860 yuan/mt in overnight trading, after hitting a session high of 15,000 yuan/mt. Lead prices are likely to continue to hover at low levels as downstream demand failed to improve significantly.   

Tin: Three-month LME tin rebounded from an intraday low of $17,850/mt to an intraday high of $18,040/mt before giving up some gains to close 0.47% lower at $17,975/mt on Thursday. LME tin stocks added 55 mt to 5,540 mt. It is expected to move between $17,800-18,100/mt today.

The most-liquid SHFE 2011 tin contract weakened 0.97% to settle at 142,710 yuan/mt in overnight trading. Support below will be seen from around 142,000 yuan/mt today.