SMM Morning Comments (Oct 27): Shanghai base metals mostly weakened on rising COVID-19 cases, US stimulus concerns

SHANGHAI, Oct 27 (SMM) — Shanghai base metals were mostly lower on Tuesday morning, while their counterparts on the LME set for a mixed start.  

Profits at China’s industrial firms jumped 10.1% year-on-year in September, according to the country’s National Bureau of Statistics.

Shanghai base metals closed mixed in overnight trading. Copper weakened 0.79%, lead slid 0.46% and tin edged down 0.02%, while aluminium inched up 0.03%, zinc rose 0.13% and nickel climbed 0.55%.  

The LME complex fell across the board for a session straight session. Tin declined 1.82% to lead the losses, copper fell 1.5%, aluminium shed 1.11%, zinc slipped 0.26%, lead weakened 0.2% and nickel edged down 0.06%.

Copper: Three-month LME copper cruised lower on Monday, ending 1.5% weaker at $6,773/mt, and is likely to trade between $6,740-6,820/mt today.

The most-traded SHFE 2012 copper contract fell 0.79% to end at 51,520 yuan/mt in overnight trading. It is expected to move between 51,300-51,800 yuan/mt today, while spot premiums will be seen slightly lower at 40-100 yaun/mt.

Overnight, the US dollar index, which tracks the greenback against a basket of its peers, rebounded, returning above 93, which pressured copper futures. Besides, talks on a new COVID-19 aid bill in Washington remain in limbo, and new virus cases spiked in the United States and Europe, which boosted pessimistic sentiment among investors.

Aluminium: Three-month LME aluminium shed 1.11% to settle at $1,822/mt on Monday, after hitting its lowest in more than two weeks at $1,821.5/mt earlier in the session. It is likely to fluctuate between $1,810-1,850/mt today.

The most-liquid SHFE 2011 aluminium contract inched up 0.03% to close at 14,755 yuan/mt in overnight trading, and is expected to move between 14,500-14,900 yuan/mt today.

Zinc: Three-month LME zinc slid 0.26% to close at $2,539.5/mt in choppy trading on Monday. Zinc stocks across LME-listed warehouses expanded 1,600 mt or 0.73% to 220,975 mt. Overnight, nonferrous metals on the LME fell across the board overnight as the US dollar gained, rising for a second straight session. Besides, expectations of a new COVID-19 stimulus package being signed in Washington before the Nov. 3 presidential election are diminishing, and new coronavirus infections surged in the US and Europe, which boosted risk-off sentiment among investors. LME zinc is likely to trade between $2,520-2,570/mt today.

The most-traded SHFE 2012 zinc contract rose 0.13% to close at 19,695 yuan/mt in overnight trading. Zinc social inventories extended gains as environmental restrictions in the north affected some downstream consumption. The December contract is expected to trade between 19,400-19,900 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 110-130 yuan/mt against the November contract.

Nickel: The most-liquid SHFE 2012 nickel contract rebounded in overnight trading, ending 0.55% higher at 119,600 yuan/mt, with open interest rising 2,291 lots to 107,000 lots.

Lead: Three-month LME lead weakened 0.2% to close at $1,776/mt on Monday, falling for three consecutive days.

The most-active SHFE 2012 lead contract closed 0.46% weaker at 14,190 yuan/mt in overnight trading, after hitting its lowest since June at 14,050 yuan/mt earlier in the session.

Tin: Three-month LME tin tumbled to a three-week low at $17,750/mt on Monday before reversing some losses to end 1.82% lower at $18,075/mt. LME tin is likely to continue to test support from the $18,000/mt mark.

The most-liquid SHFE 2012 tin contract edged down 0.02% to settle at 144,520 yuan/mt in overnight trading, after hitting a one-month low at 142,340 yuan/mt earlier in the session. It is expected to move between 140,000-146,000 yuan/mt today.