SMM Morning Comments (Oct 26): Shanghai base metals were mostly lower amid surging COVID-19 cases globally and US stimulus uncertainties

Published: Oct 26, 2020 10:00
Shanghai base metals mostly declined on Monday morning, while their counterparts on the LME also fell for the most part, as COVID-19 continues to spread around the world and whether a US fiscal stimulus package would come out before the Nov. 3 election remains unknown.

SHANGHAI, Oct 26 (SMM) — Shanghai base metals mostly declined on Monday morning, while their counterparts on the LME also fell for the most part, as COVID-19 continues to spread around the world and whether a US fiscal stimulus package would come out before the Nov. 3 election remains unknown.

 

Shanghai base metals, expect for aluminiu, closed lower on last Friday night. Aluminium, the best performer, added 0.17%, while copper weakened 0.42%, zinc shed 0.83%, lead slid 0.69%, nickel fell 1.04% and tin declined 1.12%.

The LME complex fell across the board on Friday. Nickel lost 1.23% to lead the losses, copper retreated 0.48%, aluminium weakened 0.3%, zinc fell 0.74%, lead slid 0.84% and tin declined 1.21%.

 

Copper: Three-month LME copper weakened 0.48% to end at $6,876/mt on Friday, and is likely to trade between $6,850-6,930/mt today.

The most-active SHFE 2012 copper contract settled 0.42% lower at 51,890 yuan/mt on last Friday night. It is expected to move between 51,500-52,000 yuan/mt today, while spot premiums will be seen higher at 40-110 yuan/mt. Soaring coronavirus cases globally cast a shadow on economic recovery. Besides, expectations for a US stimulus package before the Nov. 3 election faded, stoking cautious sentiment among investors.

 

Aluminium: Three-month LME aluminium slid 0.3% to close at $1,842.5/mt on last Friday, with open interest rising to 747,000 lots. It is expected to trade between $1,830-1,870/mt today.  

The most-liquid SHFE 2011 aluminium contract rose 0.17% to settle at 14,745 yuan/mt on Friday night, and is likely to fluctuate between 14,500-14,900 yuan/mt today.

 

Nickel: The most-active SHFE 2012 nickel contract shed 1.04% to close at 118,490 yuan/mt on Friday night. Pressure above from the 120,000 yuan/mt mark will be monitored today.

In terms of fundamentals, nickel ore prices remained firm as its supply continued to be tight after the Philippines entered a wet season. NPI prices were also firm with support from raw material prices. Refined nickel supply is likely to be short in the near term due to its improved demand and small inflow of imported cargoes. 

 

Zinc: Three-month LME zinc hit its highest since May 2019 at $2,596.5/mt on last Friday, before falling rapidly to close 0.74% weaker at $2,546/mt. Zinc stocks across LME-listed warehouses shrank 200 mt or 0.09% to 219,375 mt. Uncertainties on a US fiscal stimulus package before the Nov. 3 presidential election and the deteriorating COVID-19 situation prompted investors to add their short positions. LME zinc is expected to trade between $2,550-2,600/mt today.

The most-traded SHFE 2012 zinc contract touched a nearly two-month high at 19,950 yuan/mt on Friday night, before giving up all the gains to close 0.83% lower at 19,600 yuan/mt. Demand from galvanising and die-cast zinc alloy producers fell slightly due to environmental inspections and high zinc prices. Treatment charges are expected to slide to 4,800 yuan/mt Zn in November, suggesting a continuing tight zinc concentrate supply. The December contract is likely to move between 19,500-20,000 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen lower at 90-110 yuan/mt against the November contract.  

 

Lead: Three-month LME lead came off an intraday high at $1,811.5/mt to an intraday low at $1,768/mt before reversing some losses to settle 0.84% weaker at $1,779.5/mt on last Friday.

The most-active SHFE 2012 lead contract trended lower on Friday night amid tepid downstream consumption, ending 0.69% lower at 14,295 yuan/mt.  

 

Tin: Three-month LME tin fell 1.21% to end at $18,410/mt on Friday, after hitting an intraday low at $18,380/mt earlier in the session.

The most-liquid SHFE 2012 tin contract plunged to its lowest in nearly one month at 144,220 yuan/mt on Friday night, before recouping some losses to close 1.12% lower at 144,430 yuan/mt. Support below will be seen from 140,000 yuan/mt today.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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SMM Morning Comments (Oct 26): Shanghai base metals were mostly lower amid surging COVID-19 cases globally and US stimulus uncertainties - Shanghai Metals Market (SMM)