SMM Morning Comments (Sep 30): Shanghai base metals were mostly higher on weaker dollar

SHANGHAI, Sep 30 (SMM) — Shanghai base metals mostly cruised higher on Tuesday morning, holding onto overnight gains, as the dollar extended declines, while their counterparts on the LME traded mixed as investors await the first US presidential debate.

China's official manufacturing Purchasing Managers' Index (PMI) for September came in at 51.5 on Wednesday as compared to 51.0 in August, according to the country's National Bureau of Statistics.

The Caixin/Markit manufacturing PMI came in at 53 in September, down 0.1 point from August.

Shanghai base metals rose for the most part in overnight trading. Copper added 0.25%, aluminium advanced 0.53%, zinc strengthened 0.26%, lead edged up 0.3% and tin rose 1.01%, while nickel underperformed with a 1.16% loss.

The LME complex were mostly lower on Tuesday. Aluminium weakened 0.34%, zinc shed 0.29%, lead slid 0.32%, nickel fell 0.45%, while copper rose 0.24% and tin added 0.4%.

Copper: Three-month LME copper settled 0.24% higher at $6,611/mt on Tuesday, and is expected to move between $6,590-6,640/mt today. LME copper stocks surged 33,200 mt to 136,000 mt as consumption slowed down in Europe and large amounts of cargoes were delivered to the warehouses.

The most-traded SHFE 2011 copper contract closed 0.25% firmer at 51,180 yuan/mt in overnight trading, and is likely to fluctuate between 51,000-51,400 yuan/mt today, while spot premiums will be seen at 70-180 yuan/mt.

Overnight, the US dollar index weakened, boosting copper futures. However, a second wave of COVID-19 in Europe and uncertainties over new fiscal stimulus and US presidential elections will limit the upward space for copper prices. Trades are expected to be quiet on the last working day before the National Day holidays.

Aluminium: Three-month LME aluminium ended 0.34% lower at $1,778.5/mt on Tuesday, and is expected to trade between $1,760-1,790/mt today.   

The most-liquid SHFE 2011 aluminium contract settled 0.53% higher at 14,275 yuan/mt in overnight trading. It is likely to move between 14,100-14,500 yuan/mt today, while spot premiums are seen at 280-340 yuan/mt.  

Zinc: Three-month LME zinc weakened 0.29% to settle at $2,424/mt on Tuesday. Zinc stocks across LME-listed warehouses shrank 1,925 mt or 0.88% to 216,250 mt. Concerns on demand recovery weighed on LME zinc, bu US consumer confidence index that rebounded more than expected in September and weak US dollar underpinned zinc prices. LME zinc is expected to move between $2,400-2,450/mt today.

The most-traded SHFE 2011 zinc contract closed 0.26% higher at 19,365 yuan/mt in overnight trading. Zinc social inventories fell sharply in September as downstream users stockpiled ahead of the National Day holidays, and this, combined with the dollar retreating from highs, will boost zinc prices. The November contract is likely to fluctuate between 19,200-19,700 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen at 70-90 yuan/mt against the October contract.

Nickel: The most-liquid SHFE 2012 nickel contract broke above 114,000 yuan/mt after the bell as dollar weakened, but later plunged to an intraday low of 112,050 yuan/mt before reversing some losses to end 1.16% weaker at 112,090 yuan/mt in overnight trading. The December contract is expected to fluctuate above 112,000 yuan/mt today.

Lead: Three-month LME lead closed 0.32% weaker at $1,844/mt on Tuesday, after hitting an intraday low of $1,828.5/mt earlier in the session.

The most-active SHFE 2011 lead contract inched up 0.3% to end at 15,110 yuan/mt in overnight trading. The effect of pre-holiday sentiment on lead prices will be monitored today.

Tin: Three-month LME tin rose 0.4% to close at $17,425/mt in choppy trading on Tuesday, and pressure above will be seen from around the 50-day moving average of $17,700/mt today.

The most-liquid SHFE 2012 tin contract increased 1.01% to settle at 144,080 yuan/mt in overnight trading, and pressure above will be seen from around 145,000 yuan/mt today.