SMM Morning Comments (Nov 11): Shanghai base metals performance mixed as coronavirus vaccine hopes buoy sentiment

Published: Nov 11, 2020 09:20 (GMT+8)

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Shanghai base metals traded mixed on Wednesday morning, as investor sentiment continued to be buoyed by a recent positive development on the coronavirus vaccine front. Meanwhile, their counterparts on the LME were mostly higher.

SHANGHAI, Nov 11 (SMM) — Shanghai base metals traded mixed on Wednesday morning, as investor sentiment continued to be buoyed by a recent positive development on the coronavirus vaccine front. Meanwhile, their counterparts on the LME were mostly higher.

Shanghai base metals closed mixed in overnight trading. Copper slid 0.46%, zinc declined 0.54% and tin weakened 0.05%, while aluminium climbed 0.2%, lead rose 0.62% and nickel increased 0.38%.

The LME complex rose for the most part. Lead was the best performer with a rise of 1.88%. Copper advanced 0.34%, aluminium edged up 0.47%, zinc increased 0.04% and nickel went up 0.7%, while tin fell 0.19%.

Copper: Three-month LME copper added 0.34% to end at $6,961.5/mt on Tuesday, and is likely to trade between $6,930-7,000/mt today.

The most-active SHFE 2012 copper contract fell 0.46% to close at 51,900 yuan/mt in overnight trading, and it is expected to move between 51,800-52,300 yuan/mt today, while spot premiums will be seen at 120-180 yuan/mt.

Oil prices rose collectively boosted by the expectation that vaccines will soon be launched in the market at night, and NYMEX crude oil futures hit a two-month high. Biden's election as president of the US is conducive to the control of the COVID-19, and the market risk appetite continues to warm up. However, there are still differences between the two parties in the US on the scale of the economic stimulus bill, and there are still many uncertainties in the market. The US dollar index fluctuates greatly at night, which interferes with copper futures. On the spot side, traders' sentiment of holding prices remains unchanged, and premium is unlikely to sharply pull back in the near term.

Aluminium: Three-month LME aluminium rose 0.47% to close at $1,911/mt on Tuesday, with open interest remaining at 746,000 lots. It is expected to trade between $1,880-1,940/mt today.

The most-liquid SHFE 2012 aluminium contract added 0.2% to settle at 14,975 yuan/mt on Tuesday night, and is likely to trade between 14,800-15,200 yuan/mt today.

Zinc: Three-month LME zinc rose 0.04% to close at $2,653/mt on Tuesday. Zinc stocks at LME-listed warehouses increased 2,525 mt to 221,825 mt. Overnight, nonferrous metals in the overseas market generally rose, the market expected to introduce further fiscal and monetary stimulus measures, and the prospect of vaccines coming soon encouraged the zinc market. However, uncertainties still exist in the global economic recovery, which limited the upward movement of zinc. It is likely to trade between $2,620-2,670/mt today.

The most-liquid SHFE 2012 zinc contract weakened 0.54% to end at 20,210 yuan/mt in overnight trading. According to an SMM surcey, the consumption of galvanized and die-casting sections on the consumer side decreased from the previous month, while the output of smelters on the supply side maintained high. Considering the overall macro optimism, the contract is expected to keep fluctuating in the near term. The December zinc contract is expected to move between 19,800-20,300 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 rose 0.38% to close at 118,680 yuan/mt on Tuesday. Open interests rose 6,412 lots to 120,000 lots. The contract will test pressure from 119,000 yuan/mt today.

Lead: Three-month LME lead settled 1.88% higher at $1,867/mt on Tuesday. The impact of the change of the US dollar index on the market will come under scrutiny.

The most-active SHFE 2012 lead contract trended higher on Tuesday night, ending 0.62% higher at 14,630 yuan/mt. Downstream procurement has improved slightly, but the impact of factors such as slightly wider supply in the spot market on lead prices before winter stockpiling still should be monitored.

Tin: Three-month LME tin closed down 0.19% at $18,300/mt on Tuesday, after hitting an intraday low at $18,140/mt earlier in the session. The guiding role of the US dollar in the trend of LME tin will be monitored today. Support below will be seen from $18,000/mt today. Pressure above will be seen from $18,700/mt today.

The most-liquid SHFE 2101 tin contract closed up 0.32% at 146,440 yuan/mt on Tuesday night. Support below will be seen from 144,800 yuan/mt today. Pressure 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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