SMM Morning Comments (Nov 4): Shanghai base metals rose for the most part as investors wait for US election results

Published: Nov 4, 2020 09:49

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Nonferrous metals on the SHFE were mostly higher on Wednesday morning, and their counterparts on the LME rose across the board, as investors wait for the result of the US presidential election between incumbent Donald Trump and former Vice President Joe Biden.

SHANGHAI, Nov 4 (SMM) — Nonferrous metals on the SHFE were mostly higher on Wednesday morning, and their counterparts on the LME rose across the board, as investors wait for the result of the US presidential election between incumbent Donald Trump and former Vice President Joe Biden.

Shanghai base metals mostly advanced in overnight trading. Copper added 0.29%, zinc inched up 0.43%, aluminium rose 0.17%, nickel rose 0.42% and tin strengthened 1.19%, while lead slid 0.28%.

The LME complex rose across the board on Tuesday. Tin was the best performer with a rise of 1.26%. Copper advanced 0.1%, lead edged up 0.5%, aluminium climbed 1.18%, zinc increased 0.1% and nickel went up 0.89%.

Copper: Three-month LME copper added 0.1% to end at $6,779.5/mt on Tuesday, and is likely to trade between $6,760-6,820/mt today.

The most-active SHFE 2012 copper contract advanced 0.29% to close at 51,680 yuan/mt in overnight trading, and it is expected to move between 51,400-51,900 yuan/mt today, while spot premiums will be seen at 100-150 yuan/mt.

US stocks hit the biggest increase yesterday in the past two days in September, and the US dollar index also fell due to the stimulus policy that may come after the election, supporting copper prices. However, under the influence of the uncertainty of the election results and the possible turbulence, the market still has risk aversion, and the copper price has not increased significantly.

Aluminium: Three-month LME aluminium climbed 1.18% to close at $1,893/mt on Tuesday, with open interest rising to 742,000 lots. It is expected to trade between $1,870-1,910/mt today.

The most-liquid SHFE 2012 aluminium contract rose 0.47% to settle at 14,830 yuan/mt on Tuesday night, and is likely to trade between 14,700-15,000 yuan/mt today. Fluctuations caused by macro changes will come under scrutiny.

Zinc: Three-month LME zinc rose 0.1% to close at $2,546/mt on Tuesday. Zinc stocks at LME-listed warehouses fell 550 mt to 218,650 mt. The weakness of the US dollar boosted the general growth of nonferrous metals, and the positive manufacturing data combined with the prospect of the fiscal stimulus bill after the election also boosted the trend of LME zinc. At present, the market mainly focuses on the US election, and the market sentiment is highly tense. The election results will be monitored in the near term. It is likely to trade between $2,520-2,570/mt today.

The most-liquid SHFE 2012 zinc contract climbed 0.43% to end at 19,905 yuan/mt in overnight trading. The continuous decline of domestic zinc TC shows that the supply side is still tight, and the support of the supply side still exists. The market is concerned about the US election, and the uncertainty still exists. The December zinc contract is expected to move between 19,500-20,000 yuan/mt today, while spot premiums for domestic 0# Shuangyan will be seen higher at 140-150 yuan/mt.

Nickel: The most-active SHFE 2102 nickel contract climbed 0.42% to close at 116,710 yuan/mt on Tuesday. Before the election results were announced, the market turnover remained low. Despite the rising risk appetite, there are still signs of anxiety in the market. Support above will be seen from 117,500 yuan/mt today.

Lead: Three-month LME lead rose to an intraday high at $1,827.5/mt before repairing some gains to settle 0.5% higher at $1,805/mt on Tuesday. The LME lead is expected to keep fluctuating in the near term.

The most-active SHFE 2012 lead contract trended lower on Tuesday night, ending 0.28% lower at 14,310 yuan/mt. The boost of downstream consumption is not enough to support the strengthening of lead prices, and the contract is expected to continue to fluctuate in the near term.

Tin: Three-month LME tin closed up 1.26% at $18,060/mt on Tuesday, after hitting an intraday low at $17,890/mt earlier in the session. Before the election results were announced, the market turnover remained low. Despite the rising risk appetite, there are still signs of anxiety in the market. The results of the US presidential election will be monitored in the near term. The trend of the US dollar has a guiding role in the trend of LME tin. Support below will be seen from $17,300/mt today. Support above will be seen from $18,300/mt today.

The most-liquid SHFE 2101 tin contract closed up 0.32% at 146,290 yuan/mt on Monday night. The market focuses on the macro situation and the guidance provided by LME tin. Support below will be seen from 144,000 yuan/mt today. Support above will be seen from 148,000 yuan/mt today.

Market commentary Copper Aluminium Zinc Lead Nickel Tin

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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