SMM Morning Comments (Oct 28): Shanghai base metals rose for the most part as investors eye China’s 14th five-year plan

SHANGHAI, Oct 28 (SMM) — Nonferrous metals on the SHFE were mostly higher on Wednesday morning, while their counterparts on the LME fell broadly.

Shanghai base metals mostly advanced in overnight trading. Copper added 0.12%, zinc inched up 0.03%, lead rose 0.88% and nickel strengthened 1.64%, while aluminium slid 0.88% and tin weakened 0.26%.

The LME complex also rose for the most part on Tuesday. Nickel jumped 2.08% to lead the gains, copper advanced 0.41%, lead added 0.2% and tin edged up 0.08%, while aluminium and zinc underperformed with 0.05% and 0.26% losses respectively.

Copper: Three-month LME copper strengthened 0.41% to end at $6,800.5/mt on Tuesday, snapping a three-day losing streak, and is expected to trade between $6,730-6,800/mt today.

The most-active SHFE 2012 copper contract weakened 0.12% to close at 51,590 yuan/mt in overnight trading. The December contract is likely to move between 51,200-51,700 yuan/mt today, while spot premiums will be seen higher at 60-120 yuan/mt.

The White House on Tuesday tamped down hopes for a COVID-19 relief package to be agreed ahead of the Nov. 3 presidential election. This, coupled with a second wave of coronavirus cases, cast a shadow on economic recovery. Investors are now expecting positive news from China’s 14th five-year plan.

Aluminium: Three-month LME aluminium edged down 0.05% to settle at $1,821/mt on Tuesday, after hitting its lowest in more than two weeks at $1,812/mt earlier in the session. It is expected to fluctuate between $1,800-1,840/mt today.

The most-liquid SHFE 2011 aluminium contract closed 0.88% lower at 14,625 yuan/mt in overnight trading, and is likely to move between 1,400-14,800 yuan/mt today.

Zinc: Three-month LME zinc settled 0.26% lower at $2,539.5/mt on Tuesday, with open interest rising 687 lots to 215,000 lots. Zinc stocks across LME-listed warehouses shrank 175 mt to 220,800 mt. Expectations for a US fiscal stimulus package before the Nov. 3 election faded, and COVID-19 infections surged in the US and Europe, stoking risk-off sentiment among investors, but better-than-expected orders for US durable goods in September boosted sentiment. LME tin is likely to trade between $2,520-2,570/mt today.  

The most-traded SHFE 2012 zinc contract inched up 0.03% to end at 19,665 yuan/mt in overnight trading. Soaring coronavirus cases prompted some countries to tighten restrictions, which is expected to affect overseas zinc concentrate supply. Zinc consumption in north China weakened slightly due to environmental inspections. The December zinc contract is expected to move between 19,400-19,900 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen stable at 110-130 yuan/mt against the November contract.

Nickel: The most-liquid SHFE 2012 nickel contract rose 1.64% to end at 120,850 yuan/mt in overnight trading, with open interest increasing 4,366 lots to 108,000 lots. Whether the contract could stay above the 120,000 yuan/mt mark today will be monitored.

Lead: Three-month LME lead closed 0.2% higher at $1,779.5/mt on Tuesday, snapping a three-day losing streak, and is expected to continue to hold a narrow range today.

The most-active SHFE 2012 lead contract settled 0.88% higher at 14,360 yuan/mt in overnight trading.

Tin: Three-month LME tin edged up 0.08% to close at $18,090/mt on Tuesday. Support below will be seen from $18,000/mt today.

The most-liquid SHFE 2012 tin contract fell 0.26% to close at 143,460 yuan/mt in overnight trading, and is expected to move between 140,000-146,000 yuan/mt today.