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SMM Morning Comments (Sep 18): Shanghai base metals strengthened for the most part on weak dollar
Sep 18,2020 10:16CST
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Source:SMM
Shanghai base metals cruised higher for the most part on Friday morning, and the LME complex also rose broadly, as uncertainty over the economic outlook weighed on US dollar index.

SHANGHAI, Sep 18 (SMM) — Shanghai base metals cruised higher for the most part on Friday morning, and the LME complex also rose broadly, as uncertainty over the economic outlook weighed on US dollar index.

 

Shanghai base metals closed mixed in overnight trading on Thursday. Copper added 0.87%, zinc rose 0.35% and lead climbed 0.67%, while aluminium edged down 0.03%, nickel shed 0.19% and tin fell 1.12%.

Their counterparts on the LME were mostly lower on Thursday. Tin declined 1.1% to lead the losses, aluminium slid 0.67%, zinc weakened 0.53% and nickel slipped 0.76%, while copper inched up 0.04% and lead rose 0.5%.

 

Copper: Three-month LME copper fell below the daily moving average before surging rapidly by nearly $100/mt to end 0.04% higher at $6,795/mt on Thursday. It is expected to move between $6,750-6,830/mt today.

The most-active SHFE 2010 copper contract rose 0.87% to close at 51,940 yuan/mt in overnight trading, and is likely to trade between 51,700-52,200 yuan/mt today, while spot premiums are seen stable at 60-100 yuan/mt.

Overnight, oil prices turned positive, increasing about 2% as Organisation of Petroleum Exporting Countries (OPEC) and its allies said they would urge oil-producing countries to comply with output cuts, which gave some support to copper prices. US first-time fillings for jobless benefits fell to 860,000 in the week ended September 12, staying below one million for three weeks in a row, which also boosted copper futures. In addition, both US new home starts and Philly Fed Manufacturing Index declined. Uncertainty over the economic outlook weighed on US dollar index.    

 

Aluminium: Three-month LME aluminium settled 0.67% lower at $1,781/mt on Thursday.

The most-liquid SHFE 2010 aluminiun contract edged down 0.03% to close at 14,515 yuan/mt in overnight trading. Tightened supply of imported scrap aluminium and falling aluminium social inventories are likely to boost SHFE aluminium. The October contract is expected to trade between 14,350-14,800 yuan/mt today, while spot premiums are seen at 110-130 yuan/mt.

 

Zinc: Three-month LME zinc fell to an intraday low of $2,470/mt before reversing some losses to end 0.53% lower at $2,512/mt on Thursday. LME zinc stocks dipped 100 mt or 0.05% to 219,525 mt. US stocks that fell across the board, high weekly jobless claims and no more stimulus from the US Federal Reserve to support the coronavirus-hit economy weighed on zinc prices. LME zinc is likely to move between $2,480-2,530/mt today.  

The most-traded SHFE 2010 zinc contract settled 0.35% firmer at 19,915 yuan/mt in overnight trading. Stronger oil prices, uncertainty over zinc concentrate supply and stable downstream demand underpinned zinc prices. The October zinc contract is likely to trade between 19,600-20,100 yuan/mt today, while spot premiums for domestic 0# Shuangyan are seen slightly lower at 240-270 yuan/mt.  

 

Nickel: The most-active SHFE 2011 nickel contract weakened 0.19% to end at 116,450 yuan/mt in overnight trading. The dollar weakened overnight as US weekly jobless claims and new home starts both fell short of expectations, which helped SHFE nickel reverse some earlier losses. Pressure above will be seen from 117,000 yuan/mt today.

 

Lead: Three-month LME lead strengthened 0.5% to settle at $1,901.5/mt on Thursday, after hitting an intraday high of $1,912/mt earlier in the session.

The most-active SHFE 2010 lead contract followed its LME counterpart higher in overnight trading, rebounding from a session low of 14,800 yuan/mt to end 0.67% higher at 15,020 yuan/mt.

 

Tin: Three-month LME tin fluctuated widely around the daily moving average on Thursday, before sliding 1.1% to close at an intraday low of $18,050/mt. Support below will be seen from around the 20-day moving average of $17,950/mt today.    

The most-liquid SHFE 2011 tin contract declined to a more than three-week low of 141,120 yuan/mt after the opening of overnight trading, but later rebounded to a session high of 142,560 yuan/mt before paring some gains to close 1.12% weaker at 141,700 yuan/mt. Support below will be seen from around 140,000 yuan/mt today.   

Market commentary
Copper
Aluminium
Lead
Tin
Nickel
Zinc

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