SMM Morning Comments (Oct 14): Shanghai base metals mostly weakened on dim hopes for vaccine and stimulus

SHANGHAI, Oct 14 (SMM) — Nonferrous metals on the SHFE cruised lower for the most part on Wednesday morning, while their counterparts on the LME were mostly higher, amid dim hopes for COVID-19 vaccine and US fiscal stimulus.

Shanghai base metals fell across the board in overnight trading. Copper fell 0.45%, aluminium edged down 0.17%, zinc shed 1.24%, lead weakened 1.79%, nickel slid 0.52% and tin slipped 0.37%.

The LME complex performed similarly on Tuesday. Copper declined 0.77%, aluminium slid 0.16%, zinc fell 1.81%, lead shed 1.96%, nickel weakened 1.05%, and tin edged down 0.08%.

Copper: Three-month LME copper slipped 0.77% to close at $6,686/mt on Tuesday, and is expected to fluctuate between $6,650-6,730/mt today.  

The most-active SHFE 2011 copper contract weakened 0.45% to end at 51,280 yuan/mt in overnight trading, and is likely to move between 50,800-51,400 yuan/mt today, while spot premiums will be seen higher at 160-210 yuan/mt.

Overnight, the US dollar index returned above 93.5 as hopes for near-term stimulus faded as Democrats and Republicans remained at odds, weighting on copper futures. Besides, global new COVID-19 cases in a single day continued to hit new records, and Johnson & Johnson and Eli Lilly ‘s COVID-19 studies were paused, stoking concerns on the pandemic.

Aluminium: Three-month LME aluminium ended 0.16% lower at $1,853/mt on Tuesday, after hitting its highest in more than one year at $1,858.5/mt earlier in the session. It is likely to move between $1,830-1,870/mt today.  

The most-liquid SHFE 2011 aluminium contract edged down 0.17% to settle at 14,585 yuan/mt in overnight trading, and is expected to trade between 14,400-14,800 yuan/mt today. 

Zinc: Three-month LME zinc shed 1.18% to settle at $2,409/mt on Tuesday. Zinc stocks across LME-listed warehouses dipped 175 mt, or 0.08%, to 217,225 mt. Stalled talks on US fiscal stimulus package, rising global coronavirus cases and negative vaccine news weighed on market sentiment. LME zinc is likely to move between $2,400-2,450/mt today.    

The most-traded SHFE 2011 zinc contract slid 1.24% to end at 19,120 yuan/mt in overnight trading. No maintenance plan has been heard by far from domestic zinc smelters, as SMM learned from their production schedule for October, even as treatment charges for zinc concentrate continued to fall. Refined zinc output is expected to rise slightly in October. The 2011 contract is likely to trade between 19,000-19,500 yuan/mt, while spot premiums for domestic 0# Shuangyan will be seen at 280-300 yuan/mt against the November contract.

Nickel: The most-liquid SHFE 2012 nickel contract fell 0.52% to end at 116,390 yuan/mt in choppy trading on Tuesday night. Investors turned cautious as talks on a US fiscal stimulus bill remained stalled and a Johnson & Johnson COVID-19 study was paused.

Lead: Three-month LME lead weakened 1.96% to settle at $1,803/mt on Tuesday.

The most-active SHFE 2011 lead contract trended lower in overnight trading, closing 1.79% weaker at 14,560 yuan/mt.  

Tin: Three-month LME tin edged down 0.08% to close at $18,245/mt on Tuesday. Support below will be seen at $18,000/mt today.

The most-liquid SHFE 2012 tin contract moved below the five-day moving average in overnight trading, ending 0.37% lower at 146,170 yuan/mt. It is expected to trade between 145,000-148,000 yuan/mt today.