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SMM Morning Comments (Oct 9): Shanghai base metals were mostly higher as they return to trade
Oct 9,2020 10:45CST
price review forecast
Source:SMM
Shanghai base metals cruised higher for the most part as they returned to trade on Friday morning from holidays, and their counterparts on the LME rose across the board.

SHANGHAI, Oct 9 (SMM) — Shanghai base metals cruised higher for the most part as they returned to trade on Friday morning from holidays, and their counterparts on the LME rose across the board.

 

A private survey showed services sector activity in China expanded in September. The Caixin/Markit services Purchasing Managers’ Index for September came in at 54.8. PMI readings above 50 signify expansion, while those below that level indicate contraction.

 

Copper: Three-month LME copper plunged by 5.14% on October 1 on uncertainties over US stimulus packages, and further tumbled below the $6,300/mt mark after US president Donald Trump and his wife Melania tested positive for COVID-19. But currently, LME copper has rebounded to near the Bollinger band, basically reversing earlier losses. Copper stocks across LME-listed warehouses had risen for three consecutive days to 166,000 mt before the National Day holidays, pressuring copper prices, though they fell slightly during the holidays. LME copper is expected to trade between $6,640-6,700/mt today.

The most-active SHFE 2011 copper contract closed at 50,930 yuan/mt as of September 30, with open interest reaching 104,000 lots. It is likely to trade between 51,300-52,000 yuan/mt today.   

 

Aluminium: Three-month LME aluminium settled at $1,799/mt on Thursday, up $36/mt from the closing price on September 30. Market sentiment improved as the effect of easy US monetary policies offset worries about a second wave of coronavirus cases. LME aluminium is likely to fluctuate between $1,780-1,820/mt today.

The most-liquid SHFE 2011 aluminium contract closed at 14,145 yuan/mt as of September 30, and is expected to move between 14,300-14,700 yuan/mt today.

 

Zinc: Three-month LME zinc ended 0.72% higher at $2,384/mt on Thursday, after hitting an intraday high of $2,389.5/mt earlier in the session. Zinc stocks across LME-listed warehouses shrank 425 mt or 0.19% to 217,975 mt. Optimism over a fresh US fiscal stimulus and falling US initial claims for jobless benefits in the week ended October 3 underpinned zinc prices, but rising COVID-19 cases capped gains. LME zinc is likely to trade between $2,350-2,400/mt today.  

SMM data showed that social inventories of refined zinc ingots across Shanghai, Tianjin, Guangdong, Jiangsu, Zhejiang, Shandong and Hebei decreased further by 13,900 mt in the week ended September 30 to 129,500 mt, and are expected to shrink further as downstream users are likely to stockpile after the National Day holidays. Domestic treatment charges extended declines, suggesting a tight zinc concentrate supply. The most-traded SHFE 2011 zinc contract is expected to move between 19,200-19,700 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen at 80-120 yuan/mt against the October contract.

 

Nickel: Three-month LME nickel settled at $14,535/mt on October 7, up $65/mt or 0.45% from the closing price on September 30, and rose further to break above $14,700/mt in the afternoon of October 8. LME nickel stocks fell 318 mt or 0.13% from September 30 to 236,058 mt on October 7.  

The most-active SHFE 2012 nickel contract closed 1.5% lower at 111,700 yuan/mt on September 30, and is likely to trade between 112,000-118,000 yuan/mt today.

In terms of fundamentals, nickel ore prices remained firm as its supply will still be tight after the Philippines enters a wet season in the fourth quarter. With support from raw material prices, NPI prices were also firm. Refined nickel inventories fell as trades turned active after its economics improved and as downstream users stockpiled ahead of the National Day holidays. Demand for primary nickel is expected to be strong in the near term as domestic stainless steel mills will maintain high production in October.

 

Lead: Three-month LME lead closed 0.92% weaker at $1,827/mt on Thursday.  

 

Tin: Three-month LME tin rose 4.15% from pre-holiday levels to $18,175/mt as of 18:00 Beijing time on October 8, and pressure above will be seen from $18,300/mt today.

 

Market commentary
Copper
Aluminium
Lead
Tin
Zinc
Nickel

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