SMM Morning Comments (Oct 29): Base metals broadly weakened amid worries about surging COVID-19 cases

SHANGHAI, Oct 29 (SMM) — Nonferrous metals on the SHFE and LME both fell broadly on Thursday morning, extending losses, as surging global COVID-19 cases triggered more restrictions and stoked concerns about economic recovery.

Shanghai base metals, except for lead, closed lower in overnight trading. Lead, the best performer, rose 0.35%, while copper weakened 0.5%, aluminium slid 0.9%, zinc slipped 0.86%, nickel fell 0.91% and tin declined 0.39%.

The LME complex performed similarly. Lead increased 1.71%, while copper retreated 0.8%, aluminium weakened 0.52%, zinc dipped 0.18%, nickel fell 1.16% and tin slid 0.33%.  

Copper: Three-month LME copper ended 0.8% lower at $6,746/mt on Wednesday, and is expected to trade between $6,710-6,800/mt today. LME copper weakened amid a slew of headwinds. Global coronavirus cases registered new records on Wednesday, with outbreaks deteriorating in the US, Europe and India. France and Germany introduced stricter lockdown measures to curb the spread of the virus. US stocks tumbled on concerns over the pandemic and economy.  

The most-active SHFE 2012 copper contract weakened 0.5% to close at 51,420 yuan/mt in overnight trading, after hitting its lowest in nearly two weeks at 51,150 yuan/mt earlier in the session. China’s fifth plenary session of the 19th CPC Central Committee will come to an end today, and investors are expecting the 14th five-year plan.

Aluminium: Three-month LME aluminium closed 0.52% lower at $1,811.5/mt on Wednesday, after hitting its lowest in nearly three weeks at $1,802.5/mt earlier in the session. It is expected to trade between $1,800-1,840/mt today.  

The most-active SHFE 2011 aluminium contract declined 0.9% to end at 14,285 yuan/mt in overnight trading, and is likely to fluctuate between 14,100-14,500 yuan/mt today.

Zinc: Three-month LME zinc ended 0.18% weaker at $2,541.5/mt on Wednesday. Zinc stocks across LME-listed warehouses shrank 325 mt to 220,475 mt. US stocks tumbled overnight, and nonferrous metals broadly fell, as rising COVID-19 cases in the United States and Europe spurred governments to re-impose lockdown measures and there were no signs showing that a fiscal stimulus package would be reached before the Nov. 3 presidential election. LME zinc is likely to trade between $2,520-2,570/mt today.

The most-traded SHFE 2012 zinc contract shed 0.86% to settle at 19,630 yuan/mt in overnight trading. Orders for galvanising from iron tower producers weakened, and environmental inspections affected consumption, as SMM surveyed. 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 slightly higher at 120-130 yuan/mt against the November contract.

Nickel: With longs slashing positions and leaving with profits, the most-active SHFE 2012 nickel contract opened at a low of 123,000 yuan/mt in overnight trading, and ended 0.91% lower at 120,990 yuan/mt, giving up all earlier gains. Nickel prices were relatively stable despite a slew of bearish news in recent days, as worries about short nickel ore supply persisted, and NPI plants held prices firm.  

Lead: Three-month LME lead climbed 1.71% to settle at $1,810/mt on Wednesday, rising for a second straight day.

The most-liquid SHFE 2012 lead contract advanced 0.35% to close at 14,425 yuan/mt in overnight trading, and is likely to fluctuate around 14,400 yuan/mt in the short term.

Tin: Three-month LME tin slid 0.33% to close at $18,030/mt on Wednesday, after hitting an intraday low at $17,870/mt earlier in the session. Overnight, the US dollar index rose 0.45% to 93.45, the largest increase since September 23. Support below will be seen at $18,000/mt today.

The most-liquid SHFE 2012 tin contract weakened 0.39% to end at 143,300 yuan/mt in overnight trading, and is expected to move between 140,000-145,500 yuan/mt today.